Global resources 'face pressure over output'
Manama, December 12, 2012
In the final decade of the 20th century alone, 23 per cent of all output was generated at a rapid pace, putting a great stress on resources, according to a leading economic expert.
The trade-off between growth and commodity growth has become unsustainable, said independent economic consultant Dr Venkatraman Anantha Nageswaran at the Chartered Financial Accountants Mena Travelling conference, at the InterContinental Regency Bahrain yesterday.
The stress on resources due to speedy output generation cannot be met with greater push towards securing more energy assets, said Dr Nageswaran on the sidelines of the event.
"There is not much oil in the world to meet the rising demand of India and China," he was quoted as saying in the Gulf Daily News, our sister publication.
Constraints on Indian energy supplies, for instance, due to sanctions on Iran can be met by focusing more on demand and less on finding alternative sources of oil.
"India needs to restrain its oil demand and let international prices pass through as the government still regulates prices," he said.
"Greater infrastructure investment in public transport needs to be made rather than putting more vehicles on the road."
The Middle East will continue to see macro and market growth if it can successfully manage its political risks.
Underlying issues, which led to the real estate crash in Dubai, have not yet been resolved and hence the sector could remain sustainable, he added.
Conventional and sukuk offerings from the region have seen interest in Asia, as investors have realised there are limited options now available to pick up good yield.
"As yields have compressed, the diligence amongst investors has gone up," said the former Bank Julius Baer chief investment officer.
With real GDP growth at five to 6 per cent and nominal growth at 12 per cent, India still remains attractive to GCC investors, despite calls for greater regulatory easing of a few sectors.
"It is difficult to dismiss India as an investment destination for investors who have a horizon of five to 10 years or longer," he said.
India could benefit from a win-win relationship with the GCC, which enjoys oil revenue surpluses. "The Middle East looks for inputs on growing its economies through skills, while India requires energy, so there can be greater synergies between the two through agreements such as the proposed free trade deal between both partners," he added.-TradeArabia News Service