QNB economist optimistic on regions prospects
The anticipated growth in the Gulfs construction sector is expected to help ward off any negative impact on the financial markets of the US tapering policy.
Speaking at Euromoneys GCC Financial Forum in Bahrain on 3 March, Joannes Mongardini, head of economics at Qatar National Bank, said that the US Federal Reserves decision to taper or wind down its bond buying programme last year, means that at some point interest rates will go up.
The impact of this anticipated hike in interest rates has made investors increasingly anxious about their emerging market investments, with many considering whether to withdraw funds from these high risk but previously attractively priced regions and move back into developed markets.
The Gulf countries are relatively sheltered from the ill-effects of the US decision due to both its currency being pegged to the US dollar, but also due to the anticipated economic growth driven by the increased spending on infrastructure.
We are not very confident about growth in the US but we are confident about the infrastructure boom in the GCC, Mongardini said.
He added that in Saudi Arabia there remains a question mark over the role of foreign investment in supporting the countrys efforts to diversify its economy and develop its infrastructure.
Although the government states it is keen to make it easier to let foreign investment in, the numbers lag behind the intentions of the Saudi leadership, he told delegates.
Read more from the GCC Financial Forum
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