Economy Driving Forward in the Middle East Despite Concerns in Europe
The Middle East economic situation is headed for a full recovery after the worldwide financial crisis, stated a leading economist, despite ongoing European concerns.
Professor Andrew Scott of London Business School spoke in Dubai about current conditions in the global economy and the Middle East’s economic outlook. Scott noted that growth will be slow in 2012, but also praised the region’s economic rebalancing strategy and stated that the Middle East is gaining momentum.
Economic recovery in the region is moving forward and on track, according to Scott. He said that rapid growth will not come from sectors exposed to real estate and finance, although growth will rise from other sectors.
Professor Scott noted that growth in the UAE has resulted from the Emirates’ position as an economic meeting point for the West and BRIC economies.
The financial market in the region remains a mixture of creditors in strong positions and debtors in weaker positions. Rebalancing the economy is vital to economic health, stated Scott.
He put emphasis on the global economic advantages presented by the developing financial market in MENA, as opposed to a limited GCC market. The MENA market will draw and retain money within the region. Scott was reassured of global economic recovery as equity markets diversified away from the US dollar.
Scott cautioned that European concerns could impact the Middle East in 2012.
He noted that the world remains vulnerable to major financial volatility should a nation leave the European Union. The economy in Europe represents one third of the global economy, so a hard year in that region affects the entire world.
As Scott also noted, some evidence suggests that painful and recent experiences create greater caution in the short-term. But he stated that confidence and optimism will return, as those who felt the effects of negative outcomes lose influence.
GDP In Dubai Set to See 4.5 Percent Growth This Year
Growth forecasts for the Dubai GDP are from 4.5 to 5 percent for this year, according to a recent statement from the Dubai Supreme Fiscal Committee Chairman Shaikh Ahmad Bin Saeed Al Maktoum.
Although Dubai experienced serious economic hardships back in 2009 and the opening months of 2010, Dubai’s diversification strategy has created more opportunities, as well as strength and prosperity in the economy, according to Shaikh Ahmad.
He noted that moderately paced positive growth has been reported in Dubai for the last few years. GDP growth in 2010 was around 2.5 percent, and rose to three percent last year. GDP growth should reach 4.5 percent for 2012.
Shaikh Ahmad noted that Dubai has faced the challenges of negative developments in the global economy and the effects of past objectives involving high growth, and stood up to the challenges well.
Impacts in the construction and real estate sectors have resulted in a 2.5 percent drop in the economy, when the government attempted to restructure a portion of the $59 billion Dubai World debt. The area has moved beyond those challenges and come out more robust, according to the Chairman.
Shaikh Ahmad stated that there are no new plans for bond issuance, noting his satisfaction with Dubai’s economic performance. He also noted that the government is committed to supporting local organisations and entities.
Organisations in the public sector can count on the government as a back up in times of need, according to Shaikh Ahmad.
Commenting on Dubai Group’s debt restructuring plans involving direct dealings with creditors, Shaikh Ahmad noted the Supreme Fiscal Committee trusts Dubai World to handle creditor negotiations, and reiterated the government’s commitment to offer support.
He added that government-related organisations have once again displayed strength and determination when servicing debt, and the upgraded ratings reflect a robust generation of internal revenue.
Tighter controls on the budget are the order for 2012, according to Shaikh Ahmad, and a prudent overall view of the management of public funds is in place. He also noted that diversification policies have been the cornerstone of economic growth in Dubai.
Unique opportunities in the area have drawn leading entrepreneurs and key business leaders, and Dubai’s steady commitment to fair competition, diversification and the free market have helped attract the best.
Tradition states that economic prosperity and heightened activity have come from logistics, tourism and trade sectors.
Shaikh Ahmad sees the same sectors continuing to drive the economy, mainly due to support from global enterprises, and robust infrastructure, as well as Dubai’s increasing reputation as a global destination. The sectors of transportation, tourism, trade and logistics made up nearly 60 percent of the 2011 GDP in Dubai.
Strong growth has been recorded in these sectors, with a buoyant hospitality and tourism market and increased traffic through the Dubai International Airport during the last two years.
Despite the challenges presented by the real estate lending market, Dubai’s financial sector has sustained a strong and healthy position, according to Shaikh Ahmad.Paul Holdsworth, Staff Writer, Gulf Jobs Market News