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Gulf Region has Financial Reserves to Weather Global Recession Fallout

Middle East : 19 April 2010

An in depth analysis just released by Oxford Analytica has calculated that all of the Gulf States have adequate Financial Reserves to easily weather the current financial uncertainty due to the global financial outlook and further uncertainty caused by the fallout from Dubai World. While they may have had financial set-backs during the recession they all have adequate reserves to see it out without any severe problems ensuing as a result.

Overall the affects of credit default swaps and insurance against sovereign defaults had a bigger effect on the economies of Dubai and Bahrain, with Abu Dhabi coming next and Saudi Arabia and Qatar being estimated to have been the least affected overall.

Analysts suggest that Dubai and Bahrain are more prone to external global factors and their reserve funds could be depleted more quickly than other richer oil producing countries such as Qatar, Saudi Arabia, Kuwait and the UAE. Of these four Qatar are estimated to have enough in reserve funds to last them for over two years, Saudi Arabia could continue at existing spending levels for three years or more, Kuwait could sustain current spending levels for approximately four years and the United Arab Emirates have enough in reserve to see them through for at least five years.

These financial reserves help greatly in instilling investor confidence even though many private sector entities are seriously feeling the effects of the global crises. Overall confidence at present is greater in Qatar and Saudi Arabia than Abu Dhabi and this is being put down to its close relationship with Dubai.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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