DUBAI, 1 May 2007 — A renowned economist has called for the reorientation of Middle East thrust from the Western markets to Asian region.
Delivering the keynote address at the Fourth Evolvence Capital Alternate Investment Conference in Dubai yesterday, Dr. Marc Faber, asked if the Middle East will become more Asia-centric or remain more focused on the developed Western markets.
He said that unlike the US which imports its oil from a diversified set of countries, including Africa and Latin America, the Chinese, Koreans and Taiwanese get up to 90 percent of their oil shipments from the Middle East.
A reorientation in the Asia-Middle East equation has several advantages including providing OPEC countries with alternative energy markets, driving growth in financial services sector and a higher degree of energy security for Asian countries. The new prominence of emerging markets is different from the financial crises that gripped Mexico, Asia and Russia in the 1990s.
The US depends on external borrowings to finance the gap between its national savings rate and its consumption. Increasingly, those funds — largely raised by selling Treasury securities — come from poorer nations.
“Developing countries have cleaned up their balance sheets, slashed inflation rates and accumulated hard-currency reserves,” Faber said. “More than 29 percent of the $806 billion in net securities purchases came from developing countries compared with just five percent in 1998, according to Bank of America.
Capital flowing into the US economy enables Americans to continue consuming beyond their means. But some analysts find it worrying that the world’s wealthiest nation now depends on loans from some of the globe’s poorest countries.”