The Gulf will suffer a surge in its unemployment rate comparable to that of the US and Europe this year, but it also has the ability to play a key role in solving the global crisis, a Saxo Bank senior executive said on Thursday.
Job losses will be a “key driver” for economies in 2009 and the GCC is likely to experience a two-fold rise in its unemployment rate amid the current economic crisis, said Steen Jakobsen, chief investment officer at Saxo Bank.
“In 2009, unemployment will be a key driver of everything,” said Jakobsen.
He said that fiscal and monetary policy were likely to be “less potent” against this backdrop of widespread rising unemployment.
“If you lose your job, you don’t care where the stock market is. You just want your job back and you want your identity back.”
Jakobsen said that the Gulf was no more immune to the crisis than anywhere else.
“2008 was the year where the banking crisis impacted the economy; 2009 will be the year where the economy will impact the banking sector back,” he said.
“There is a lot of denial. Policymakers and politicians seem to think they can just buy some time and by buying time the problems will go away.”
However, the GCC has the tools to help lift the global economy out of the current downturn, Jakobsen said.
“The Gulf has a unique strategic opportunity to play a major role in the solution to this crisis, with the surplus, the capital, the sovereign wealth funds, net wealth,” he said.
But, for this to be sustainable, the Gulf would have to open up its economy, create greater reciprocity, and improve regulation.
“They will definitely be playing a major role in my opinion and deservedly get recognition for that, but I think to make a real claim long-term, they need to open up the local markets,” he said.
Confidence and transparency needs to improve across the globe, according to Jakobsen, who added that this was particularly important in the case of the GCC.
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