Middle East economy
FROM THE ECONOMIST INTELLIGENCE UNIT
The Middle East presents a contrast between supercharged economic performance in the Gulf Arab states, stemming mainly from resurgent oil and gas prices, and high political risk in many of the countries surrounding the Gulf.
Symbolic of the burgeoning confidence in the Gulf was the year-end announcement of plans to build the SR100bn (US$26.6bn) King Abdullah Economic City in Jeddah. The involvement of the UAE's Emaar Properties in this massive undertaking provided further evidence of the synergies between Dubai's ambition, flair and imagination and the untapped investment potential of Saudi Arabia. The next 12 months will see major projects advancing on many fronts in Saudi Arabia, including oil, gas and petrochemicals--the building blocks of the economy--transport (the Saudi Landbridge), telecommunications, financial services and real estate.
The Dubai International Financial Centre and the affiliated Dubai International Financial Exchange (which has just appointed Henry Azzam, a noted Lebanese economist, as its chief executive) will no doubt play their part in mobilising finance for developments in Saudi Arabia and elsewhere in the region. The other main poles of the Gulf economic boom are Abu Dhabi—which is embarking on its own hugely ambitious real estate and industrial initiatives—and Qatar, soon to become the world's largest exporter of liquefied natural gas, and bidding to steal a march on Dubai with the Qatar Financial Centre.
Neighbourhood watch
The Gulf economies have advanced and prospered despite proximity to countries ravaged by wars and internal political tensions. That pattern is unlikely to change. Iraq remains fundamentally unstable, despite adherence to the formal political steps outlined after the US-led invasion. The new Iraqi government will be a loose coalition between rival sectarian and ethnic interests, with its constituent parts stronger (and better armed) that the central institutions. The advance of Islamist political groups in Iraq has been matched elsewhere in the region, notably in Egypt and the Palestinian Territories. The Muslim Brotherhood has become the main opposition force in parliament, a victory that brings with it some responsibility to clarify basic aspects of its political philosophy. Likewise, Hamas will face a decision as to whether to take a full part in running the Palestinian Authority, and thereby signing up to the principle of a negotiated settlement with Israel, following the end-January election (although it is by no means certain that this will go ahead on time).
Another highly charged political arena is Syria and Lebanon, as the reverberations of the assassination of Rafiq al-Hariri continue to make themselves felt. The regime of Syria's president, Bashar al-Assad, is teetering on the edge, but retains the ability to inflict damage on its domestic and Lebanese opponents. Also hanging over the region during 2006 will be the nuclear dispute between Iran and the West. The chances of a speedy negotiated settlement appear to be slim.
The main driver of the region's continued high growth rate is the rise in oil and gas prices. The Economist Intelligence Unit expects the price of date Brent crude oil to average US$55/barrel in 2006, the same as in 2005. The market will remain tight despite a modest increase in global production capacity, mainly because demand has not been severely affected by the sharp rise in the oil price since 2003. Towards the end of 2006 the first of a series of new Saudi oil developments will come on stream, and we expect a modest fall in the oil price from 2007 onwards.
SOURCE: ViewsWire Middle East
The Middle East presents a contrast between supercharged economic performance in the Gulf Arab states, stemming mainly from resurgent oil and gas prices, and high political risk in many of the countries surrounding the Gulf.
Symbolic of the burgeoning confidence in the Gulf was the year-end announcement of plans to build the SR100bn (US$26.6bn) King Abdullah Economic City in Jeddah. The involvement of the UAE's Emaar Properties in this massive undertaking provided further evidence of the synergies between Dubai's ambition, flair and imagination and the untapped investment potential of Saudi Arabia. The next 12 months will see major projects advancing on many fronts in Saudi Arabia, including oil, gas and petrochemicals--the building blocks of the economy--transport (the Saudi Landbridge), telecommunications, financial services and real estate.
The Dubai International Financial Centre and the affiliated Dubai International Financial Exchange (which has just appointed Henry Azzam, a noted Lebanese economist, as its chief executive) will no doubt play their part in mobilising finance for developments in Saudi Arabia and elsewhere in the region. The other main poles of the Gulf economic boom are Abu Dhabi—which is embarking on its own hugely ambitious real estate and industrial initiatives—and Qatar, soon to become the world's largest exporter of liquefied natural gas, and bidding to steal a march on Dubai with the Qatar Financial Centre.
Neighbourhood watch
The Gulf economies have advanced and prospered despite proximity to countries ravaged by wars and internal political tensions. That pattern is unlikely to change. Iraq remains fundamentally unstable, despite adherence to the formal political steps outlined after the US-led invasion. The new Iraqi government will be a loose coalition between rival sectarian and ethnic interests, with its constituent parts stronger (and better armed) that the central institutions. The advance of Islamist political groups in Iraq has been matched elsewhere in the region, notably in Egypt and the Palestinian Territories. The Muslim Brotherhood has become the main opposition force in parliament, a victory that brings with it some responsibility to clarify basic aspects of its political philosophy. Likewise, Hamas will face a decision as to whether to take a full part in running the Palestinian Authority, and thereby signing up to the principle of a negotiated settlement with Israel, following the end-January election (although it is by no means certain that this will go ahead on time).
Another highly charged political arena is Syria and Lebanon, as the reverberations of the assassination of Rafiq al-Hariri continue to make themselves felt. The regime of Syria's president, Bashar al-Assad, is teetering on the edge, but retains the ability to inflict damage on its domestic and Lebanese opponents. Also hanging over the region during 2006 will be the nuclear dispute between Iran and the West. The chances of a speedy negotiated settlement appear to be slim.
The main driver of the region's continued high growth rate is the rise in oil and gas prices. The Economist Intelligence Unit expects the price of date Brent crude oil to average US$55/barrel in 2006, the same as in 2005. The market will remain tight despite a modest increase in global production capacity, mainly because demand has not been severely affected by the sharp rise in the oil price since 2003. Towards the end of 2006 the first of a series of new Saudi oil developments will come on stream, and we expect a modest fall in the oil price from 2007 onwards.
SOURCE: ViewsWire Middle East
posted by Marko at 12/23/2005 01:26:00 PM
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