DUBAI, 12 January 2007 — The Gulf region in 2007 is likely to witness a period of robust economic growth, a continuation of political innovations, rising regional instability due to events in Iran and Iraq, and unchallenged presence of the United Sates as the security guarantor, according to experts at the Dubai-based Gulf Research Center (GRC).
The forecasts were made during the GRC’s fourth annual conference yesterday while releasing the findings of the “Gulf Yearbook 2006-2007”. The event was attended by a number of officials, intellectuals and business executives from both the Gulf region and outside.
The Gulf Yearbook — the GRC’s premier publication — is an annual compendium of analyses on events in the Gulf region during the previous year, with forecasts for the next. The essays by scholars delve into political, diplomatic, economic, security and energy issues related to the Gulf Cooperation Council (GCC) countries, as well as Iran, Iraq and Yemen. The “Gulf Yearbook” will be published in Arabic and English and will be available in print and digital formats by the end of March.
In his opening remarks, the GRC chairman, Abdulaziz Sager, highlighted important issues that transpired during the last year. “The conference is being held at a time when the Gulf region is passing through a dangerous phase, especially in light of the tragic situation in Iraq, which is akin to a civil war, and has the potential to disintegrate. There is also the complication of the Iranian nuclear file in light of the faltering diplomatic efforts and the sanctions imposed by the United Nations Security Council, which may even lead to a military confrontation,” he said.
The Gulf Yearbook, Sager added, “discerns and analyzes the new developments in the region, but avoids preconceived judgments in interpreting them.”
In his overview of the GCC economies in 2006, Eckart Woertz, an economics program manager at GRC, said that “the long-term outlook of oil price remains positive, although there might be some soft spots over the next two years due to an economic slowdown in the US and China, and some incremental oil production coming on the market from non-OPEC countries like Brazil. A part of the oil price surge of recent years can be attributed to a decline in spare capacity, but the current OPEC production cuts ironically might lead to lower prices should the market perceive them as a recovery of such spare capacity.”
On the international level, Woertz stressed the increased importance of the GCC countries in financing the US current account deficit. “As the US deficit continues to mount, the dollar is likely to slide further and the GCC countries need to worry about currency diversification and modification of their currency peg to the dollar,” he said.
In light of the stock market corrections in 2006, Woertz pointed to the need for improved corporate governance, transparency and broader capital market development.