Mahmood Rafique | Arab News
Monday 1 December 2008
Last Update 1 December 2008 12:00 am
MANAMA: Bahrain is set to beat the world’s largest economies, including the US and Western Europe, with a forecast of 3.5 percent gross domestic product (GDP) growth next year, a senior economist said.
Marios Maratheftis, regional head of research, Middle East and south Asia, at StanChart Bank, said the US would record minus 2 percent while Britain would see minus 4 percent GDP growth in 2009. Bahrain, according to the expert, and the GCC as a region will face a slowdown next year but will yet maintain positive growth as a bloc.
Bahrain will outperform the United Arab Emirates which is set to see a GDP growth of 2.7 percent and Saudi Arabia 2.2 percent next year. However, Qatar’s economy will grow at a pace of 4.5 percent in 2009, he said.
The ongoing financial crisis will have a global impact but the likelihood is that many emerging economies, particularly those across east Asia and in parts of the Middle East, will be in a position to rebound sooner and stronger than their counterparts in the West, Maratheftis added.
Economies such as the US and Britain face significant structural problems that point to recession next year with either a period of stagnation or a modest policy-induced pickup in 2010. In contrast, he said, challenges seen across much of the emerging world are more cyclical in nature.
The economic environment will be very difficult over the coming year, with recessions evident in many countries but 2010 is likely to be viewed as the year of recovery. So there is a big difference in outlook, with the West facing fundamental structural problems and the East facing a cyclical setback.
Maratheftis said a lot of the challenges currently facing the GCC were created by ultra-loose monetary conditions and the distortions and excesses they caused. Currency reform is not currently a priority.
There is, however, a need for the common GCC currency — which can still be implemented in 2010 — to be much more flexible.