SHARJAH, 23 February 2005 — The Institute of International Finance (IIF) estimates that between the beginning of 2004 and the end of 2005 the total foreign asset holdings of the six Gulf Cooperation Council countries will grow by at least $150 billion.
The IIF, a global association of financial institutions with more than 340 members from over 60 countries, also forecasts a GDP rate growth in 2005 of around five to six percent for North Africa and the Middle East. That was the same rate of growth in 2004.
These predictions were made at a press conference following a meeting of leaders of regional and international finance held in Abu Dhabi. The conference concluded that the economic outlook in the Middle East and North Africa this year is good, as the region’s banking institutions strengthen their balance sheets, management systems and competitiveness.
Michael Tomalin, chief executive officer of the National Bank of Abu Dhabi, said after the eighth annual conference of chief executive officers: “We have had highly productive and constructive discussions.... our discussions underscored the determined efforts of banks in this region to become strong competitors in international finance, and to enhance their risk-management, retailing and human resource approaches. Our collaboration with the Institute of International Finance, the world’s leading association of banks, has been instrumental in our efforts to attain these objectives.
“We believe that the Middle East is now emerging as one of the world’s most dynamic banking and finance locations,” he told the press conference.
IIF Managing Director Charles Dallara said net private capital flows to all leading emerging markets are likely this year to be around the same high level seen in 2004 — close to $280 billion, the highest volume since 1997.
He said that financial institutions in the Middle East are participating increasingly in global finance.
The IIF expects significant global economic growth with low inflation in 2005.
However, Dallara warned that the global economy does face risks, most notably from the continued balance of payments and fiscal imbalances among the leading economies of Western Europe, Asia and the United States.
“This is a time when prudent risk management at leading investment institutions is essential. There was clear understanding of this perspective at the conference,” he said.
The IIF has over 60 member institutions now in the Middle East and North Africa and undertakes continuous in-depth economic analysis of 15 economies in the region.
Howard Handy, IIF director for the Middle East and Africa, pointed out that the oil exporting countries of the region “are reaping the major economic and financial gains at this time, but it is important to note that non-oil countries of the region are also benefiting from improved economic policies in some areas.”