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Gulf Recovery Expected to Increase Pace this Year Due to High Spending

Abu Dhabi : 23 February 2010

Economic recovery in the Gulf may not be as fast as for other developing economies; however it would gain impetus this year with high oil prices, improvement in banks’ balance sheets, and ongoing high levels of government spending. Economists said yesterday.

Simon Williams, HSBC chief economist said that banks are not yet lending however, they are more liquid and are better capitalized. It’s a problem of going through credit cycles. We’ve had an acute retardation in the last 12 months and a gradual pick-up in lending is expected during the year.

Lending growth has been slow throughout the Gulf, even in Saudi Arabian economy where the sector remained unchanged. In the UAE, loans grew by only 2.4 per cent in 2009 as compared to roughly 35 per cent average in the last four years.

Simon Williams is expecting 2 per cent UAE economic growth this year. He said that even the continued stagnation in loan growth would be compensated by the projected continuation of stimulus spending by the government.

Brad Bourland, chief economist at Saudi-based Jadwa Investments, said Gulf economies must also benefit from the high possibility that oil prices will remain well above $50 per barrel for foreseeable future.

Andrew Reid, Staff Writer, Gulf Jobs Market News
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