Qatar leads Mideast economic growth
Qatar had the highest nominal per capita income at purchasing power parity in 2010 among the 25 rapid growth markets (RGM), followed by the UAE. Over the past 10 years, Qatar has also been the fastest growing economy, with an average growth of 13 percent per annum, according to Ernst & Young's new quarterly Rapid Growth Markets Forecast (RGMF).
Egypt's average growth was at 4.9 percent, the UAE at 4.3 percent and Saudi Arabia at almost 3.2 percent. Altogether, the 25 RGMs have grown on average by 5.8 percent per year over the last decade, more than three times as fast as the advanced economies combined and this rapid pace of expansion is set to continue, with growth in RGMs outpacing the advanced economies by more than 3.5 percent per annum over the next decade. "Rapid growth markets are becoming increasingly important in terms of both their overall weight in the world economy and their global influence. While the advanced economies struggle with weak growth, RGMs seem well-placed to better weather the economic storm," said Bassam Hage, MENA Markets Leader, Ernst & Young.
"With the exception of Egypt's slow recovering economy which is being weighed down by local developments, Qatar, Saudi Arabia and the UAE are expected to see continued strong growth in the future. Economic activity across the region has slowed in the past few years reflecting reduced economic confidence and greater caution. However, GCC government spending in areas such as infrastructure, healthcare and social policy is expected to drive further growth," Bassam added. The forecast shows average GDP growth in the RGMs edging just under 6 percent in 2012, wit the American and Asian countries seeing the most marked slowing in growth. The outlook in the Middle East, however, is more positive with resource-rich countries such as Qatar, Saudi Arabia and the UAE benefiting from high oil prices.
The dynamics of the global economy have changed with a new set of fast-growing markets challenging the position of the established advanced economies. The rapid growth markets (RGMs) are expected to grow collectively by 6.2 percent this year, almost four times more than the anemic growth expected in the Eurozone, This new quarterly economic forecast, which is co-produced with Oxford Economics and based on the Oxford Economics' Global Econometric Model, is well placed to offer insight on macroeconomic trends across 25 rapid growth markets, which have been selected based on the size of the economy and population, strategic importance for business and proven strong growth and future potential. The 25 RGMs will account for 38 percent of world consumer spending and 55 percent of world fixed capital investment, according to the forecast.
By 2020, rapid growth markets will account for 50 percent of global GDP when measured at purchasing power parity. Rising FDI Foreign direct investment (FDI) inflows to all RGMs have risen from $205 billion in 2000 to $444 billion in 2010, and they now receive around 50 percent of global FDI inflows. Qatar, the UAE and Saudi Arabia were among the top five RGMs in terms of FDI inflows per capita in 2010. But FDI is no longer a one-way street - RGMs are themselves increasingly becoming major investors in advanced economies, as their leading firms buy up global competitors. Bumpy road ahead "While the overall outlook for the RGMs is positive, one thing is certain: their progress will not be smooth. They have to deal with a number of challenges to ensure ongoing growth.
The challenges include avoiding inflationary pressures arising from overheating; managing the impact of capital inflows on the competitiveness of their manufacturing industries and ensuring that their infrastructure (physical and human) is sufficient to support their long-term growth potential," Bassam noted. The global economic outlook is very uncertain, with the risks of a renewed recession in advanced economies. and widespread financial crisis growing. However, the RGMs are increasingly developing their own critical economic mass and most have the financial means, if necessary, to help support growth and protect their banking sectors from being significantly impacted.