December 04, 2008

Gulf economies should be seen as asset based and not oil based

Dr Nasser Saidi chief economist with the DIFC authority & ED of Hawkamah recently said that Gulf countries should no longer be seen as oil based economies but rather as asset based economies.

Speaking on the first day of DIFC week Dr Saidi said that “For the foreseeable future, the income from assets and net foreign assets will exceed the income from oil for these countries. For them, interest rates will matter more than oil prices.”

He added that Gulf countries' foreign reserves have been growing throughout the decade and are approximately USD 365 billion in 2007 and set to grow to USD 455 billion in 2008.

He said that the region is living in an economic renaissance, in large part because of the unprecedented value and depth of investments in infrastructure, which now total more than USD 1.3 trillion. As a result of this investment, there is an increase in labor productivity and the absorption capacity of these economies, as compared to the 1970s and 1980s when most oil revenue went into consumption.

Dr Saidi also pointed to strong population growth rates and a reverse brain drain that is seeing highly trained and experienced Arabs and other expatriates returning to the region.