Middle Eastern Countries Pouring Money into Growth

The Middle East is enjoying the current oil boom but with restraint, according to the World Bank this week.  Middle Eastern countries have learned their lessons and are pouring new profits into economic development.

For example, Saudi Arabia has cut its domestic debt almost by half, boosting economic growth.  But the Bank also warned that to sustain growth the Middle East would need to expand its private sector.  In an interview with the AFP news agency, the Bank's chief economist for its Middle East and North Africa branch, Mustapha Nabli, warned that countries should not become too reliant on oil revenues.

Instead they should diversify their economies in order to produce enough jobs and move the focus away from oil reserves that will eventually run out. "This (growth) is coming because you have an increase in public expenditures which is multiplying and creating jobs but this cannot sustain itself as such," he said.

"A long-term solution is private investment to create new activities, new projects and increase productivity." However, the Bank's report said that the behavior of Middle East countries is changing. They are no longer building up huge debts by betting that oil prices will remain high, as they did in the 1970s and 1980s.  This time "there's a realization that they can't do things as before," said Jennifer Keller, report author and senior regional economist.