No real "crisis" in the Middle East

Middle East Finance

Economic analysts have urged the oil-rich states in the Arab world to increase spending in order to speed up recovery from the global recession, which they claim had a limited effect on the region compared to the rest of the globe.

Speakers at a Kuwaiti forum also insisted officials and businessmen should take action to step up financial sector supervision.

"We must activate public spending... It's time that Gulf states activated their fiscal policies," Ibrahim Dabdoub, chief executive of National Bank of Kuwait, told the first Kuwait Financial Forum.

Ali al-Ghanem, the head of the Kuwait Chamber of Commerce and Industry, also called for the adoption of expansionary fiscal policies and provision of private sector loans.

"It is necessary today to adopt an expansionary fiscal policy to speed up the recovery from the global crisis. We must resolve credit bottlenecks for the construction sector and other companies," Ghanem said.

Gulf Arab economies should recover faster

At the forum, analysts also pointed out that, even though it is too early for many nations to consider withdrawing financial stimulus packages, Gulf Arab states should recover faster than other nations.

The global economic turmoil sent Gulf Arab economies into a downturn this year but generous spending and rising oil prices are helping the world's top oil-producing region get back on its feet.

This may come as a shock to many after Dubai's real estate sector suffered significantly as a huge number of projects were put on hold or even cancelled.

European influence

The decisions made in some of Europe's biggest countries to not withdraw stimulus funds has proved influential in how the Middle East has coped with the recession, as Europe is one of the Gulf's largest trading partners.

A great deal of caution is required when emerging from recession, and governments need to be willing to remain financially supportive.

"It is very important that they stay the course and they continue the fiscal stimulus," said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh.

"At the time when banks have been more risk averse the state is coming in to support."

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