Massive investment in infrastructure projects across the Middle East and North Africa has pushed the region’s economies to outperform the weak global economy.
Stretching from Mauretania in the west, to Iraq in the east, the MENA region includes many of the world’s leading oil exporting nations.
Regional growth is predicted to exceed 5% this year, according to research by the Qatari National Bank (QNB), while the rest of the world is expected to average 2.5% to 3%.
Revenues from exporting oil has swelled the coffers of MENA governments and given them the cash to pour into infrastructure projects that have boosted employment and local wealth.
The International Monetary Fund reckoned the region saw a real growth in GDP of 6% last year, and forecasts growth will continue apace while the more sluggish economies of oil-importing nations lag behind with a slower recovery.
Cash piles
A rise in the price of oil helped the two big oil-exporting nations in MENA, Qatar and Saudi Arabia, to add even more to their cash piles.
The QNB report pointed out that compared to MENA, the Gulf Co-Operation Council (GCC) countries had lower inflation – around 2.4% – and large balance of payments surpluses.
“Gulf countries are predicting demand for oil and gas will drop, bringing lower prices and a fall in production. It makes sense not to rely on hydrocarbon exports and to diversify,” said a QNB spokesman.
“In 10 years, growth will come from increasing public investment and more demand from the private sector. It’s not only the Gulf countries, other MENA nations are expected to increase growth thanks to more public investment and the continuing global recovery.”
One aspect of growth in Gulf economies is the newfound strength of the region’s banks.
Banks booming
For instance, in 1999, the National Bank of Abu Dhabi boasted assets of around $9 billion, with operations mainly limited within the emirate.
Now, the bank has a balance sheet showing assets of more than $100 billion and operations in 14 countries, with more on the way.
By 2021, the bank is planning to have offices in 41 countries and to generate 40% of earnings from outside the United Arab Emirates.
QNB agrees that even with nearly $1.5 trillion in assets, the foremost Gulf banks are still behind the leading international banks, which have about $2 trillion assets, but points out the gap is narrowing.
One reason for their success is the leading Gulf banks are state-owned and have access to resources and deals in the region that are closed to their rivals.
