Arab banks to pursue emergency economic plan
The Arab world is in need of an emergency plan to boost inter-Arab banking and economic cooperation in a bid to diminish the impact of political crises sweeping the Middle East, Lebanese and Arab banking officials said Wednesday. “The Union of Arab Banks ... is in the process of putting in place an emergency Arab economic plan,” Union of Arab Banks Secretary-General Wissam Fattouh said in a news conference at the Phoenicia hotel in Beirut.
The emergency plan will see discussions on the “future of the Arab world in light of recent transitions” during a two-day forum starting Nov. 24 in cooperation with global and Arab institutions including the Arab League, the World Bank and tens of other economic institutions.
The popular uprisings and political crises that hit several Arab countries will see a decrease in Arab GDP growth from 4.84 percent in 2010 to 3.76 percent in 2011, head of the Lebanese Banking Association Joseph Torbey said. However, Torbey added that the gloomy picture won’t last long before it is reversed in 2012 with an Arab GDP growth rate expected at 3.84 percent. While Egypt’s GDP is forecasted to drop from 5.15 percent in 2010 to 1.22 in 2011, it is expected to rise back to 1.75 percent in 2012, Torbey said.
Similarly in Tunisia, the GDP growth rate will drop from 3.05 in 2010 to 0.01 in 2011 to jump back to 3.93 percent in 2012 while Syria is forecasted to see a downward trend with its GDP growth rate decreasing from 3.23 percent in 2010 to 2.02 in 2011 and 1.55 in 2012.
The Arab banking sector, which counts nearly 430 institutions that manage around $2.5 trillion in assets and more than $1.3 trillion in deposits with a capital base of $270 billion, will witness disparity in performance between oil producing countries and the rest of the Arab world. While the banking sector in Gulf countries is expected to grow as oil-producing states benefit from a rise in prices due to political and economic uncertainty, most countries in turmoil will end 2011 on a negative note.
Torbey said UAE and Saudi banks recorded respectively a 4.14 and 6.54 percent increase in bank assets in the first nine months of 2011 compared to 5.78 and 3.28 in the entirety of 2010.
Qatari bank assets grew 22.94 percents in the first nine months of 2011 compared to 11.12 percent in the entirety of 2010 while Kuwaiti banks recorded a 6.03 percent in the first six months of 2011 compared to 1.84 percent in 2010.
In countries witnessing political turmoil, negative growth rates were recorded in Bahraini banks where asset growth rates of -10.84 percent were recorded in the first eight months of 2011 compared to 0.18 percent in entirety of 2010.
Egyptian banks also recorded a negative growth rate of -2.52 percent for the first eight months of 2011 compared to 16.19 percent in the entirety of 2010 while Syrian banks recorded a rate of 0.23 percent for the first four months of 2011 compared to 6.22 percent the entirety of 2010.
The recent development in Egypt, Libya, Yemen, Tunisia and Syria indirectly influenced non oil-producing Arab states like Lebanon, Jordan, Oman and Palestine.
In Lebanon, bank assets grew 7.08 percent for the first eight months of 2011 compared to 11.87 in the entirety of 2010 while Jordanian bank assets recorded a 6.19 percent growth in the first nine months compared to 10.85 in the entirety of 2010.
The slow growth caused by regional instability amid a global financial crisis requires Arab banks to kick off investment programs in cooperation with central banks and Arab governments, Torbey said, elaborating on a series of measures that need to be adopted.
Among those measures is the need to create Arab banking conglomerates and cooperation frameworks to confront any future crises, according to Torbey, who urged for further collaboration with legal organizations and international institutions to set international banking regulations.
Torbey added that efforts to encourage global investments in the Arab world and increased cooperation with the global and regional financial markets should feature on the agenda of Arab banks.