A distinguished American think tank suggested last week that the UAE and other countries around the globe face growing political uncertainty resulting from the global financial crisis. To apply this theory to the GCC, and the UAE specifically, borders on the absurd; they are far from sunk.
The truth is that UAE and the rest of the GCC countries will be among the first economies to rebound from the financial meltdown on the back of a steady recovery in oil demand and global trade flows. Moreover, the economic outlook for the GCC is positive, as the region continues to amass huge foreign exchange reserves driven by the unprecedented rally in oil prices until July 2008, combined with the fact that the GCC states together jointly control 45 per cent of world oil reserves and 18 per cent of world natural gas reserves.
The proactive measures taken by various GCC governments to manage the situation seem to be working. The GCC states have generated considerable fiscal surplus, substantially improving their balance of payments position and enabling them to invest wisely in a variety of industrial and infrastructure projects. The GCC has in the process emerged as a role model for economic and social transformation, which will help to prolong the region’s gains.
The GCC states have gained expertise in economic diversification with a renewed thrust in the hydrocarbon sector. All the important social indicators – such as universal healthcare, a rising literacy rate and growing participation of women in government – indicate steady improvement, resulting in a gradual transformation to more egalitarian societies. Further, a unified stance on most of the key economic issues, whether a currency union, controlling inflation, or management of regional liquidity, have been addressed through regular coordination in multiple forums among the GCC states, making them collectively stronger.
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