Gulf leads the way

The region’s economies are officially slowing down, but most are still a huge success and the envy of the West. Whichever way you look at it, and whichever figures you believe, the end result is always the same: Arab economies are on the march. This is the place to be, to live, to work, and to invest in.

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By  Richard Agnew Published  January 15, 2006

|~||~||~|The region’s economies are officially slowing down, but most are still a huge success and the envy of the West. Whichever way you look at it, and whichever figures you believe, the end result is always the same: Arab economies are on the march. This is the place to be, to live, to work, and to invest in. Last week we reported on how Dubai’s economy had grown by 16% in 2005, with GDP hitting US$37 billion. The forecast, from the Department of Economic Development, was for that figure to rise to US$40 billion this year. That makes Dubai a better, and faster growing economy, than even China. Now, it looks likes the good news is spreading around the region. According to a Reuters survey published last week, whilst Gulf Arab economies will slow slightly this year, record oil revenues should sustain a regional boom in 2006 despite risks from inflation and asset bubbles. There is of course a note of caution — after a strong performance in 2005, growth will ease in the main energy producers — Saudi Arabia, Kuwait, Qatar and the UAE — as oil output and prices plateau. And the slowdown will be most pronounced in the region’s largest economies. UAE growth will dip to 5.8% in 2006 from an estimated 6.9% in 2005, according to the average forecast in the survey, which was conducted amongst seven analysts on January 4 and 5. In Saudi Arabia, growth will be 4.9% in 2006, down from 6.1% in 2005. The Saudi Arabian finance ministry estimates the economy grew 6.5% in 2005, with non-oil sector growth of 8.4%. Bahrain’s average real GDP growth is expected to stay at 6.6%, while Oman’s should rise to 6.4%. But slowdown is a long way from recession. Most European economies would give anything to be part of this Gulf ‘slowdown.’ Look at France, look at Germany. Both once strong nations, both now in crisis. Other European countries are facing genuine slowdowns. And nearly every analyst I speak to, tells me that the way that revenues are being invested into massive infrastructure projects across the Gulf is to be applauded by Arabs, and admired by Europeans. How true. ||**||Time to buy shares|~||~||~|Less than a month ago, the UAE stock market seemed to be in trouble. Indiices slid to their lowest in nearly five months on December 24. Despite the value of the market having doubled in the past twelve months, panic selling set in. Could this be the beginning of the end? Could those fears of a stock market crash be realised? Could the Dubai economic dream turn into a nightmare? We never thought so, and the figures prove we were right. Just before the Eid holiday, The Dubai Financial Market index of 30 listed companies rose 3.44% to 1,075.72 points. Abu Dhabi stocks rose 1.39% to 5,230.03. Given the fact it is a holiday period, the gains are still impressive. All 17 stocks on the DFM actually gained in price. In anything, now is a very good time to buy. Stocks are at their lowest prices for some time given the fall in December, but as we have already reported in the past two weeks, the Dubai economy is growing and growing. So keep on buying and buying. I seriously doubt whether stocks will get this low again for some time to come. ||**||India’s comeback|~||~||~|In between praising the economies of the Arab world, it has been pointed out to me many times that I rarely have anything good to say about the Indian economy. Well, that’s partly because any praise I heap on it simply won’t be enough. Last week we reported on the rise of the Indian aviation industry. That is just another sector in India to experience an upsurge, following on from the incredible success India is now enjoying as a manufacturing and outsourcing centre. Last year, GDP hit US$692 billion, a rise of nearly 7%. This has all come in a country with a population of 1.1 billion that is pretty scattered geographically to the say the least. It is a great achievement, one that every Indian should be proud of. That said, what a great shame it is that little of that new-found wealth is being shared across the country. ||**||

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