By Andy Sambidge
HSBC's chief economist says move would sharpen competitive edge amid crisis.
GCC countries must encourage more integration in their business sectors and economies to ensure the region emerges early from the global financial crisis, a leading economist has said.Simon Williams, chief economist at HSBC Middle East, commended plans for the proposed single currency and said leaders should look to "join forces" and "form alliances" to increase their competitive edge, adding that there was potential for the region's eight state-owned airlines, nine stock markets, 17 telcos and 136 banks.
In a lecture reported by KUNA News Agency, Williams said an early economic recovery in the GCC region depended on a "better manipulation" of oil revenues, which are expected to fall in 2009 from record levels of about $570bn last year when oil prices peaked at more than $147 a barrel.
He said GCC countries had to "adopt a package of measures to reform their economies and educational and information systems, manage the domestic debts and liberate their markets".
He also saw providing more liquidity to banks and continuing investment in infrastructure projects as other key factors of recovery in the lecture organised by HSBC's branch in Kuwait.
He noted that the problems of each member of the GCC differed with Kuwait suffering from the impact of the downturn on investment companies while the UAE's real estate market was its main concern.
The banking sector of Saudi Arabia was problem-ridden, Williams added.
Last month, Williams said the Middle East faced its biggest challenge in years, with the worst financial crisis since the 1930s threatening oil exporters, but investor appetite was returning after state intervention and recovering crude prices.
"The Gulf not only looks to have braved the downturn but also to have been well placed to catch early the tail wind of recovery," said Williams.