The International Monetary Fund (IMF) has said that the Gulf economies could grow at a stronger pace in 2010 than more developed economies.
“Non-oil GDP [gross domestic product] growth is estimated to have been about 2.8 per cent in 2009, and the rebound in overall growth in 2010 is expected to be stronger than in advanced economies,” says May Khamis, deputy division chief of the IMF’s Middle East and Central Asia department, and Abdelhak Senhadji, the department’s division chief, in the March issue of the fund’s ‘Finance and Development’ magazine.
“While the GCC’s short-term economic outlook is clouded by the global crisis and by recent developments in Dubai, the region’s medium-term outlook remains broadly positive, supported by rising commodity prices,” they add.
The current difficulties in Dubai, namely the current $26bn restructuring of Dubai World, have led to the re-emergence of temporary pressures on the region’s equity markets.
“Markets are likely to take a less sanguine view of quasi-sovereign and private risk, which may increase the cost of borrowing and reduce access to international capital markets for some GCC countries,” say Khamis and Senhadji.
Gulf policymakers face the “immediate priority” of cleaning up bank balance sheets, through continued upfront recognition of losses and immediate bank recapitalisation, and the restructuring of non-bank institutions – particularly in Kuwait and the UAE.