The Gulf states are well positioned for growth, and compare favourably with Asian markets of the 1990s, says a report due to be published tomorrow.
The six GCC countries stand up well compared with the economic transition of the four key Asian markets 20 years ago, according to the research company Arabia Monitor, a member of the World Economic Forum's regional agenda council on the Middle East & North Africa (MENA).
The report, Beyond the Arab Uprisings, measured the Gulf economies against Hong Kong, Singapore, Taiwan and South Korea. "We find opportunities and challenges - but an encouraging picture overall," the report noted. "To look beyond short term 'noise' we [carried] out a comparison between the GCC and the newly industrialised Asian countries, applying a 20-year lag where relevant," it added.
Last year, the Gulf nations were found to have lower inflation, and a higher current account balance and gross national savings — both relative to GDP — than their Asian counterparts in 1991. The GCC's "positive future growth prospects" gives it a "comparative advantage", the report noted. Florence Eid, the chief executive of Arabia Monitor, said the GCC region was "just as well positioned" as those emerging markets during their "economic liberalisation period".
Other regions with which the GCC region compares well include eastern Europe after the fall of the Berlin Wall, and Latin America in the 1990s. "We don't only compare well, we have a very, very good head start," said Ms Eid. Increasing trade with the rest of the world should help to insulate the GCC against the global recession, the report added.
"The Arab region's increasing trade, primarily crude exports to Asia, will have provided a buffer from the slowdown in the US and EU", it said. However, the region faces "choppy waters" ahead, both economically and politically, because of the volatility of the global economy, the report added. Ms Eid said the GCC region's predicted health was largely due to issues such as its oil and gas reserves, and the timing of the group's economic rise alongside the internet boom.
While the GCC countries had learnt important economic lessons from other markets, she said, there was still room to improve education standards in the region.
"We're not well ahead on the education parameter," she said. "If you look at Abu Dhabi's development strategy, all of that reflects learning. But there's more to do. In investment in research and development, we're still behind." There are other challenges faced by the MENA region and GCC markets, the report added.
"MENA and GCC hold their own against Asia, but [the] investment surge has insufficient effect on the ground in populous Arab countries," it noted. "Water scarcity is another key concern." Ms Eid said the MENA region was becoming more integrated. "The entire MENA region compares very, very well to eastern Europe in terms of private sector investment.
"We've seen much more regional integration. We will see much more of that, just [as happened] in Asia. We're going to have new engines of growth," said Ms Eid, pointing to markets such as Libya and Iraq. The report noted countries such as Egypt and Tunisia "will hold up better" than some eastern European states during the 1990s.
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