06-11-06

The buoyant world economy and oil boom brought exceptional growth and boom to Arab oil producing counties in particular where current account surpluses and government revenues "exploded to multiples of their pre-boom levels," Director General and Chairman of the Board of Directors at Arab Fund for Economic and Social Development Abdlatif Al-Hamad told a forum of the Institute of International Finance (IIF).
The speaker told at the two-day conference hosted by National Bank of Kuwait that Arab oil revenues jumped from $ 143 bn to around $ 350 bn between 2002 and 2005. However, the revenues constitute only 0.8 % of the world GDP compared to the 2 % recorded in 1980, the speaker added.

Al-Hamad pointed out the oil surplus quickly resulted in increase in investment spending and there was also notable improvement in companies' profits, in addition to considerable growth rates in real estate, investment, industry, and other sectors.
On past oil crises, the speaker said "There are a number of signs to confirm that oil countries have learned some lessons from their past mistakes and started managing the ongoing oil boom more wisely."

"Countries such as Saudi Arabia, Kuwait, Qatar, and the UAE are in the process of upgrading oil infrastructure and increasing investment, upstream and downstream, in order to increase supply and overcome potential shortfalls due to the tightening of spare capacity.”
"The investments needed for oil production, refining natural gas, and petrochemical projects for the period 2006-2010, are estimated at $ 220 bn, double the value of the planned projects for the previous four years, " he went on saying.

The speaker picked a second point on lessons learned and said, "Arab financial markets have grown more sophisticated and more mature. While equity markets barely existed in the 1980s, today the financial systems are able to manage large portfolios of financial assets."
He attributed this to "modernization of the banking system, the increasing involvement of international financial institutions in the region, the development of new investment instruments, the emergence of well-organized domestic investment funds, and the expansion of stock markets."

On a third point, the speaker said, "We now have a new generation of better qualifies managers who will be able to recycle these surpluses in a wiser and more sophisticated manner both in the public and private sectors than in the past."
"Arab countries should be inspired by the experiences of countries such as Mexico which has successfully managed the transformation of its economy from an oil-dependent to a highly diversified one." The speaker however noted success stories could also be found in the Arab region and noted Qatar and UAE.

He remarked Dubai has become an international centre hosting some of the biggest international events, that Abu Dhabi is expanding oil investments upstream by developing its supply capacity and downstream by investing in industrial projects in new free zones, and that Qatar is now an international service hub and a leading world gas exporter and is all the while expanding its LNG industries.
The speaker further told the conferees the Arabian Gulf countries "should take advantage of the growing opportunities in emerging economies."

NBK Executive Officer Ibrahim Dabdoub had inaugurated the conference and introduced Al-Hamad as key speaker.
The event is hosted in Kuwait for the first time and the issues to come under discussion include Middle East and North Africa economic issues with emphasis on banking, financial, and investment sectors.