By Andy Sambidge
Credit Suisse says improved business confidence, stable oil price to drive recovery.
Improved business confidence levels and stable oil prices will drive a rebound in growth in the Middle East and Africa region in 2010, Credit Suisse has said.
Presenting an economic overview of the region, it said that within the GCC, Qatar was expected to achieve the highest GDP growth rate for the second consecutive year in 2010 – estimated at 18.5 percent.
Qatar was the fastest growing economy in 2009 with GDP growth reaching an estimated 9.6 percent year-on-year.
“This growth will be driven by expansion of LNG production and the non-hydrocarbon sectors of the economy. In line with our positive economic outlook for 2010, supported by stronger energy prices, we believe that fiscal and external accounts will most likely reach surpluses,” said Kamran Butt, head of Middle East Equities Research at Credit Suisse, Private Banking.
The impact of the global financial crisis has been limited in Qatar due to timely and supportive macroeconomic policies and intervention in the local banking system, he added.
On Saudi Arabia’s economic outlook, Butt said that growth looked "compelling from a long-term perspective".
A big demographic premium, high savings, and the urgent need for infrastructure spending, makes the kingdom an attractive investment destination, Butt said.
Butt added: “In our view, stable oil prices and improved business confidence will be the major catalysts for a robust rebound in GDP growth in 2010. While the region is set to witness improved economic conditions across all markets, the growth in GDP will not be evenly distributed with Qatar leading in 2010.”
Mohamad Hawa, head of MENA Equity Strategy and Financials Research at Credit Suisse, Investment Banking, added that Abu Dhabi banks looked attractive and Qatar was a preferred market due to its high economic growth.
According to Butt, strong external and fiscal positions prior to the global recession allowed GCC economies to implement measures in response to the global downturn.
"When the shadow of the global financial crisis swept the region, almost all countries provided liquidity support, while a majority of them opted for monetary easing, with Saudi Arabia, UAE and Kuwait guaranteeing deposits," he added.
Credit Suisse said risk remained within Middle East and Africa in the form of inflation, with the region likely to see upward pressure on inflation, which is currently subdued.