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‘Gulf countries can turn crisis into opportunity’

DUBAI -The Gulf countries have the resource base to turn the current global financial crisis into an opportunity and the realisation of this potential will depend on the adoption of appropriate policies and strategies, according to several speakers attending the Wharton Global Alumni Forum (WGAF) here.

The GCC countries as a whole have a population of about 30 million people only, while the region accounts for 35 per cent of the proven global oil reserves. On the other side seventy per cent of the region’s population is less than 25 years old and many countries now have an educated young leadership. All these positive factors can help them to come out of the current crisis stronger, said the prominent Kuwait-based businessman Mohammed Abdul Aziz Alshaya,

Access to huge energy reserves and other factors like locational advantages will help the Gulf region recover faster from the present global financial crisis, said Russel E. Palmer, Professor of Finance at the Wharton School participating in a special panel discussion arranged as part of the WGAF.

Referring to the much-debated impact of the oil price crash on the resilience of the economies of the Gulf countries, the Chairman and Managing Director of Morgan Stanley in Saudi Arabia Fahad Abdullah Almubarak said it was true to that oil revenue contributed to about 35 per cent of the GDP of the Gulf countries, 75 per cent of their export earnings and 85 per cent of their budget.

But those countries were able to accumulate huge cash reserves in the last couple of years when the oil price was running high. This helped them to minimize the impact of the current fall in oil prices. The budget of all the GCC countries were showing excess figures this year than the previous years despite the oil price crash, and this was a manifestation of the robustness of their economies, Fahad Abdullah Almubarak said.

He suggested that the GCC countries should continue to invest in areas like education and infrastructure and cash in on the current slide in prices of the commodities like steel and cement to carry forward their development projects. They must be cautious when they adopt the development models from other parts of the globe and while opening up their economies to the global level market forces.

The need for the GCC countries to form a common market and monetary union was emphasised by the Governor of the Central Bank of Bahrain Rasheed M Al Maraj. Nasser Bin Hassan Al-Shaikh, the Director General of the Dubai Department of Finance said the Dubai Government would go ahead with the investments announced in this year’s budget despite the global financial crisis.

Later delivering the key-note address, Joe Saddi, Chairman of the Booz and Company said the development patterns of the Gulf countries had several paradoxes like volatile stability, shortage amidst surpluses, restricted free markets, tendency towards global integration and while upholding nationalistic interests.

ramavarman@khaleejtimes.ae