But rating firm also warns that the recovery of Mideast economies is tentative and diverse
Recently published six month updates from Moody’s Investors Services reported that Middle East sovereign economies are improving throughout 2010.
But the report also warns that the pace of recovery is somewhat tentative and varies in the same way other areas are witnessing. The uncertainty of the global economy is also posing a risk to recovery.
In the February outlook report for the Mideast sovereigns Moody issued certain ratings. An April report showed an upgrade for Lebanon, whose sovereign rating was bumped up a notch to B1.
The February report included upgraded sovereign ratings for Oman, bumped to an A1 rating, and Saudi Arabia, who were moved up to an Aa3.
Higher oil prices and an accumulation of assets were predicted to help the Gulf states preserve a financial upswing throughout 2010, according to Moody’s Head Analyst for Middle East Sovereigns, Tristan Cooper. Cooper is based in Dubai.
That stimulus was expected to keep the financial activities of the private sector moving, even though consumer confidence and bank credit were still in a slow, weakened state.
The Moody’s report states that the public financial situation of oil importers in the Gulf makes them unable to keep up the desired level of funding support. However, the banks in these countries had less of a credit shock in the worldwide crisis of 2008 and have seen more stable growth rates because of that.
The real GDP of oil importers is predict to experience a growth recovery this year, but it will stay below the levels reached before the crisis and remain lower than other emerging markets.
Moody’s also notes there are two areas that are expected to perform differently in 2010. In Lebanon, despite rising political hostilities, the economy is gaining and in Dubai the heavy leveraging and slow real estate sector will damage growth.
Cooper notes that the volatile financial markets of Europe have had only limited effects on the Mideast’s average cost of funding.
Tunisia and Morocco, who have the largest trade with Europe, are vulnerable to any drops in demand from that area.
Moody’s also observed that the geopolitical risks in the Gulf are still present. Tighter sanctions against Iran have been issued by the UN Security Council trying to discourage further nuclear developments. The ongoing conflicts between Arabs and Israelis are also remain a risk.Andrew Reid, Staff Writer, Gulf Jobs Market News