Wednesday 20 June 2018

Mena 'to see 3.5pc growth despite turmoil'

Dubai, February 1, 2012

The Mena region faces headwinds amid economic crisis, but should be able to manage 3.5 per cent growth in GDP as domestic demand returns, said Saxo bank, an online trading and investment specialist, in its outlook for 2012.

The combination of the ongoing EU crisis, slowing aggregated global demand and rising social tensions will leave no nation untouched and could result in the most pivotal year by far since 2008, warned Saxo in its Q1 2012 outlook report.

Overall, the bank said it looks for world growth to slow in 2012 to 3 per cent.

According to Saxo, a perfect storm is pending as tensions are mounting unbearably.

'A renewed crisis in the EU is inevitable as the leaders of the union have failed to address the fact that the sovereign debt crisis is one of solvency and not liquidity provision, and its growth outlook for Europe is mostly negative,' the report stated.

In the US, growth will likely be somewhat stronger than elsewhere. In Asia, growth will likely look far weaker than consensus, as China faces some heavy lifting on rebalancing its economy.

Uncertainty is great in this area as the regime is capable of forcing activity and behaviour to a degree not attainable elsewhere, Saxo said in the report.

The surge in commodities in 2011, partly due to initiation of the US Federal Reserve's Quantitative Easing 2 programme, saw the outlook for the Mena improve, it stated.

Crucial for economic growth are stabilisation in the political sphere following a roller coaster ride in 2011, which saw several changes of government including that of Libya, it added.

Steen Jakobsen, chief economist at Saxo Bank said, “The perfect storm is coming but there is no need to panic. We are optimistic that 2012 will be a year of great change and a perfect storm in the Mena area is based on good underlying fundamentals combined with almost imperfect visibility on geopolitical risk.”

'We expect oil prices to remain range bound this year as global growth eases and investments are needed for the region to continue to prosper and become less dependent on oil for economic growth,'  Jakobsen added.

'We look for the rapid rise of Qatar to continue this year though growth will be markedly lower than the ebullient years of recent times. GDP is set to rise 6 per cent after double digit growth in previous years,' he observed.
'Bahrain, Egypt and the UAE are expected to be among the laggards of the region albeit moderate growth of around 3 per cent is still expected,' said Jakobsen.-TradeArabia News Service

Tags: economy | Middle East | Outlook | warning | tension | EU crisis | Saxo |

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