| 19 Jan 2010 |
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Gulf economies head for slow stabilisation — Saddi
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Tuesday, Jan 19, 2010
Gulf News
Abu Dhabi Gulf Cooperation Council (GCC) economies are in for a year of slow stabilisation in 2010 with businesses focusing on consolidation and deleveraging, Booz and CompanyBooz and Company
Chairman Joe Saddi said yesterday.
"Barring a major recession, again, it's hard to see why oil prices would fall completely," Saddi said, speaking on the sidelines of the Insead Leadership Forum.
"So we should continue to see moderate levels of growth and continued government spending on infrastructure."
Saddi's company provides consultancy services to regional businesses and governments. The UAE's economy is expected to grow by 2-3 per cent this year according to the projections of local banks and government offices. The National Bank of Abu Dhabi (NBAD) last week posted an expectation of 2.8 per cent growth.
Gulf economies were hit hard in 2009 by the sharp decline in oil prices from record levels set in the previous year, shortage of liquidity in the banking system and bursting of real estate bubbles.
Rebound
According to United States Department of Energy projections, oil prices are expected to rebound to about $80 (Dh293) per barrel this year compared to about $60 per barrel in 2009, a factor expected to boost Gulf GDPs near or beyond the figures recorded in 2008, according to NBAD.
Growth
Still, sustainable growth requires increased attention to research and development (R&D) which accounts for less than 0.1 per cent of the region's GDP, compared with 1.5 per cent in developed countries, he said.
"The kind of industry we've traditionally [regionally] had does not lend itself to R&D," he said.
"But that's changing. And you can see that looking at the Masdar Initiative or water desalination in Saudi Arabia."
By Ahmed A. Namatalla
© Gulf News 2010. All rights reserved.
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