A second global recession could be triggered if the uprisings gripping the Arab world spread to Saudi Arabia, a leading investment strategist has said.
The fear of unrest in the world’s biggest oil exporter has helped propel oil to a two-and-a-half year high and any further price hikes risk a serious headwind to the global economy recovery, said Cesar Perez, Chief Investment Strategist for JP Morgan Private Bank EMEA.
“[Saudi Arabia] is vital. More disruption in Saudi and I see the oil price will go to $150 or $180,” Perez told Arabian Business.
“Do you worry then about inflation? No, I worry about recession… If Saudi goes the way of Libya it could trigger another global recession. That would be the nightmare scenario.”
Saudi activists had planned a ‘Day of Rage’ on March 11, inspired by uprisings in Tunisia and Egypt that toppled long-standing leaders Zine Al Abidine Ben Ali and Hosni Mubarak.
But a blanket ban on protests in the Gulf’s wealthiest state and a heavy police present in key cities appeared to quash rumblings of unrest in the kingdom.
The Eastern Province, where most Saudi oil fields are located, was the only region that saw a series of small protests on Friday by minority Shi’ites.
Perez said the protests were a wake-call for Saudi Arabia, which last month rushed to avoid unrest by unveiling a spending plan worth $37bn to ease social pressures.
“I think they could do more and people would like to see more things happening. They are steps in the right direction but you can always do more… If it is not today then Saudi needs to, sooner or later, try to change a bit,” he said.
The key issue for the Middle East now was the management of post-revolution Egypt, he said.
“Everything depends on how Egypt evolves. If that is successful it will set an example for the region.”For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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