Crisis-hit Middle East sees recovery signs

The Middle East faces its biggest challenge in years, with the worst financial crisis since the 1930s threatening oil exporters, but investor appetite is returning after state intervention and recovering crude prices.

“The Gulf not only looks to have braved the downturn but also to have been well placed to catch early the tail wind of recovery,” said Simon Williams, chief economist at HSBC Middle East.
With oil near $80 a barrel, the Gulf is still positioned to outperform the rest of the world amid the global recession, given its status as the largest energy exporting region.

“There are positive impacts from the oil price in terms of regional and government fiscal positions and current accounts,” said Fox. “If oil prices stabilize around today’s levels it won’t be long before we start to see economies and governments start to save again and restore fiscal balances.”

Regional state budgets are based on crude prices ranging from $40 to $50 a barrel, and with excess cash the region’s largest sovereign wealth funds are ready, if prices are right, to seek overseas acquisitions in sectors ranging from financial, commodities to real estate.

Reuters