• Home
• /
• Business

Business Leaders Peg Slower Growth in Arab Economies

DUBAI - Arab economies will grow at a slower pace of 3.9 per cent in 2009 as a result of global financial turmoil and a sharp decline in oil revenues, the head of the Chambers of Commerce in the Middle East said on Tuesday.

The drop in oil income will add to pressure on Arab governments seeking to maintain their spending and growth rates, said Adnan Kassar, chairman of the General Union of Chambers of Commerce, Industry and Agriculture for Arab Countries.

“While Arab countries had maintained the pace of growth in 2008 at 5.8 per cent, this year their growth will slow to 3.9 per cent,” he said. “For every one dollar decline in the price of a barrel of oil, Arab oil revenues shrink between $4 and $10 billion a year.” Kassar, who also is a former Minister of Economy in Lebanon, made his comments at the Arab Investment Forum ‘09 in Dubai.

Deutsche Bank’s senior executive in the region, speaking at a separate event in Abu Dhabi late Monday, made a gloomier forecast. Saudi Arabia and Kuwait may see their economies shrink this year, and most of the other Gulf countries will grow by less than two per cent, said Henry Azzam, Deutsche’s Chief Executive Officer for business in the Middle East and North Africa.

Among the member nations of the Gulf Cooperation Council, only Qatar is likely to achieve annual growth in double digits; Qatar is on track to grow by 10 per cent this year, but that is almost half as fast as the 19 per cent growth it managed in 2008, Azzam said. A worse than expected slowdown in emerging countries, particularly China, could depress oil prices further and cause GCC countries to burst their budgets, the Deutsche Bank executive added. However, Shaikh Nahyan bin Mubarak Al Nahyan, Minister of Higher Education and Scientific Research, said he believes that investments by GCC would play “a central role” in helping the world recover from the global financial crisis.

“The whole world is following closely the investment activities of the GCC countries, and also expects the region to play a central role in facing the global economic crisis,” Al Nahyan told the two-day Dubai forum. He stressed the need to ensure the integrity and openness of the Arab financial system and said that Arab countries were committed to continue investing in both economic and social 
development projects.

“There is now a growing awareness on the importance to diversify sources of national income and to develop national human resources while reducing the dependence on oil.” Al Nahyan added.

Dr. Salim Al Hoss, former Lebanese Prime Minister and former economics professor at The American University in Beirut, said the global crisis was likely to continue for a few years due to its depth and severity.

“The solutions have not really emerged yet because the crisis has revealed the deficiencies of the global economic system,” he said. “Overcoming the current crisis requires an international agreement on a new global economic system which may take two years or more to be in place.”

· issacjohn@khaleejtimes.com, ramavarman@khaleejtimes.ae