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Kuwait, UAE severely hit by global economic crisis in GCC
Countries that have economies that are more integrated into the global economic network are likely to be more severely affected by the global slump, and as far as the Gulf region is concerned, this includes the UAE and the Kuwait.
However, with the fundamentals in the region being better than in several other regions, the governments in the region have room to maneuver investment and development in view of a population of 35mn, supported by USD1.2trillion worth of foreign assets, pointed out Henry Azzam, the CEO of Deutsche Bank for MENA region.
Speaking during a seminar, which addressed the causes behind the current economic turmoil and certain aspects affecting the region, the expert felt that the average growth rate forecasted for this year was 1.5 percent for Saudi, 1.8 for Kuwait, 0.5 percent for UAE, 1.5 for Bahrain, 1.2 for Oman and 10 percent for Qatar.
According to Azzam, the real growth of domestic product has been forecasted in the negative, due to drop in production in Saudi, UAE and the Kuwait. The growth has also been weighed down due to drop in rates of local demand, rates of lending and non-oil exports.
Globally, the average economic growth forecasted was a minus one percent, as the US and majority of Europe, suffer negative growth. Developing nations which were witnessing high growth rates during the past couple of years, will also see a sharp decline in growth rates.
The major reason for this global recession is the ‘over-fascination’ with rendering loans into bonds. This, coupled with inadequate market monitoring, and lack of initiatives towards correction of the markets, were the reasons pointed out by the expert for the current economic slump.
Tougher monitoring, more active role by Central Banks, and re-consideration of development policy principles implemented in the region over the past couple of years, are necessary to help the markets recover from the current turmoil, he pointed out.
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