Strong structural reforms undertaken by the Gulf governments since 2001, huge economic diversification and liberalisation under way in some countries like the UAE combined with huge fiscal reserves are likely to minimise the impact of global economic slowdown on Gulf economies.
"A cyclical slowdown is already underway in the region. However, compared to the last oil price shock, the GCC [Gulf Co-operation Council] countries have implemented numerous structural reforms and accumulated huge petrodollar reserve funds," said Yvan Mamalet, an economist with Societe Generale Asset Management.
"We believe that a repeat of the early 1980s sharp economic downturn will be avoided [in the Gulf] - unless the global recession proves much deeper and longer than we expect and oil prices fall significantly further," said Mamalet.
The Gulf countries benefited from this decade's huge spike in oil prices. GCC governments had foreign assets of $1.8 trillion (Dh6.62 trillion) at the end of last year and the tally is expected to top $2 trillion by the end of 2008, according to recent estimates by the Institute of International Finance (IIF).
Analysts and rating agencies say GCC banks remain in good shape, with notably very low leverage ratios.
In addition to diversification in tourism and finance, petrochemical industries have also developed. While the public sector continues to play a strong role in most Gulf economies, most of these countries have been opening up to foreign direct investment.
Gulf News
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