If you are reading this on the beach, I have some advice. Hurry back to the office, there's business to be done in the Middle East. The summer of 2004, as MEED's teams in London and the region can confirm, has been one of the busiest on record. Orders have been flowing in without respite, particularly from Saudi Arabia.
The prospects for the autumn, winter and spring look excellent. From what we hear, most of our customers are feeling the warm business breezes associated with an economic boom. The main complaint is lack of time, not lack of money. You don't have to be an economics professor to understand why. Record oil prices and increased oil production are combining to bequeath a giant financial windfall to the oil producing states of the Middle East and North Africa. This means all of them with the exception of Morocco and Jordan. In some instances, the flow of money is impressive. We reported last week that Standard Chartered forecasts GCC oil income will rise above $180,000 million in 2004. This is about twice the value of total GCC exports in 1998. The region will enjoy, as MEED has consistently forecast, double-digit economic growth on average this year. Most Middle East countries will record substantial current account surpluses and budget deficits have been reduced or eliminated across the board (see Cover Story). The consensus is that oil prices will remain above $30 a barrel in 2005 due to strong demand and supply interruptions. This assumption is underpinning forecasts that economic trends in 2005 will continue to be highly positive. I believe that the business cycle will start to reach a peak around this time next year. This is a golden moment for everyone involved with Middle East economies. Of course there are concerns. Is the oil price consensus credible? Might the West go into recession after US presidential elections in November? What happens if there is another terror outrage? But the balance is overwhelmingly positive. This is a time for sunny optimists. So what are my business tips at this happy hour? First, boom time is the best time to do difficult things. Got a business that is performing below expectations? It's time to sell. Need to implement an unpopular restructuring? Do it now. There is never a good moment for tough decisions. Make them now when the tide is flowing in your favour. Second, don't let it go to your head. When there's a boom, there are always people trying to turn it into a bubble and make a killing. I'm sure in the next year or so you will be approached by men in suits with the best investment proposal you've ever heard. They will play on recent revenue trends and forecast with conviction that this boom will go on forever. Remember the dotcom disaster. Tread warily. Third, be committed. Always keep your options open. But once you've made a decision to launch a new product, create a new business or buy a bolt-on, don't hold back. Put your best people on it and let them run as fast as they can. Set outrageously demanding targets and offer ridiculous bonuses. You could all be pleasantly surprised by what happens in the next year. Fourth, remember that booms end. The biggest prizes go to those who see it coming and judge accurately when it's on its way out. The trouble for those of us doing business in the Middle East is that forecasting the oil price is a mug's game, making working the business cycle extremely hazardous. I'm confident the oil price buoyancy will go on for at least 18 months. But I have a feeling we have reached a new oil price plateau that will last for five years and more. If I'm right, you should be playing the long game. But what if I'm wrong? Fifth, have fun. Doing business is no joke. It's often the hardest thing you do. So when the good times roll, as they will this season, enjoy them. They won't last. Finally, you should take