Booming Economies and Increased Expenditure on Luxury Goods

When levels of expenditure on luxury goods rise, it is usually an indication of booming economies. Money has to be abundant before citizens can afford the luxury of private jets or residential palaces. Such is currently the case in most Gulf Cooperation Council (GCC) countries.

US financial institutions are well aware of this wealth effect. Citigroup, for example, was recently said to be discussing eight to ten private aircraft financing deals worth more than $400M. Private jet purchases in the GCC have doubled in the last 24 months from 43 in 2006 to 86 in 2008.

Purchases that might have seemed too extravagant a few years ago are now becoming common place in the Middle East. This all is good news to sound and strong US businesses. The cash rich GCC states have been a major source of capital for Western conglomerates in today’s hard economic times.