“Gulf Economies Head For Slow Stabilization—Saddi”
In the January 19, 2010 issue of Gulf News, Booz & Company Chairman Joe Saddi (Middle East) said that Gulf Cooperation Council (GCC) economies are in for a year of slow stabilization with businesses focusing on consolidation and deleveraging. “Barring a major recession, again, it’s hard to see why oil prices would fall completely,” said Saddi, who was attending the INSEAD Leadership Forum in Abu Dhabi. “So we should continue to see moderate levels of growth and continued government spending on infrastructure.” 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. But Saddi said GCC governments haven’t shelved reformed initiatives embarked on before the crisis and have continued spending on infrastructure at levels approaching those prior to the financial crisis. Even so, 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. “The kind of industry we’ve traditionally (regionally) had does not lend itself to R&D,” Saddi said. “But that’s changing. And you can see that looking at the Masdar Initiative or water desalination in Saudi Arabia.”