Rumble in the Gulf

The Rich Economies in the Gulf are Experiencing their Fastest Growth in Decades

The rich economies of the Persian Gulf are experiencing their fastest growth in decades. Thanks to high oil prices and the growing demand in non-oil sectors, these economies have experienced growth rates of 5.5% to 6% in their gross domestic products since 2004 and 2008 in not expected to be any slower. Such high growth is by no means confined to Dubai or the UAE. It is vividly felt across all Gulf Cooperation Council (GCC) countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

In a symbol of the region’s upward reach, the Burj Dubai officially became the world’s tallest tower on February 5, 2008. “We have only seen the tip of the iceberg,” said Mr. Omar Bin Sulaiman, Governor of the Dubai International Financial Center. “There will be a bigger boom in the next 5 to 10 years, as people keep coming to the region from around the world,” he added.

In Dubai, the Dubai International Financial Center (DIFC) is home to 550 companies and is arguably the current center of financial activity in the region. During the current cycle of rising oil prices, the substantial windfall has not only been invested outside the region but also in the GCC countries. This is the main distinguishing factor between the current boon in the Persian Gulf region and previous ones. As a result the GCC countries have become a hub for regional business activity and a powerhouse for global financial and business deals. In Dubai, for example, the country’s tremendous success has had a spillover effect for the whole region. Due to the fundamental strength of the current boom in the Gulf region the current growth pattern is expected to continue well into 2009 and beyond.

The GCC represents more than half of all petroleum reserves of the Organization of Petroleum Exporting Countries (OPEC). Saudi Arabia, whose oil revenues are approaching $1 billion per day, is building refineries and petrochemical plants to get the most value our of every barrel of oil that is sold and to develop an infrastructure that can help expand oil production.

As for the future of the oil market, it is anticipated to remain tight partly due to the rising demand from rapidly growing economies of India and China. With today’s global economy and with the emergence of solid, strong, and rapidly growing economies in Asia, the strength of the GCC economies is poised for sustained and rapid growth in the coming years. The Middle Eastern economies are less susceptible to a slow down in the US, making their growth less vulnerable to the crisis in the US markets.

“Dubai is certainly a vibrant place that is growing exponentially and is already the base for many international institutions and support services. Bahrain is obviously marketing its new Marina Financial Center hard and has some interesting benefits as a center of excellence in the field of Shariah based investment,” said Ms. Imogen Dillon Hatcher, Managing Director of FTSE Europe, Middle East, and Africa.

“It is no secret that businesses are thriving to expand to the GCC countries. The obvious advantages of having a presence in the region bring a strong motivation for companies to establish an active presence there,” said Mr. Nima Montazeri, Managing Director at Floyd Associates. “Benefits of having activities in the GCC include access to a growing and healthy consumer market, proximity to the fastest growing and most prestigious financial market in the Middle East, and potential access to investment capital for both growth companies and investment houses around the world,” he added.

About Floyd Associates

Floyd Associates is a privately held consulting firm with expertise in corporate finance, business strategy, and mergers and acquisitions. Our expert team advises companies of various sizes on capital raising instruments, optimal capital structures, and formation of strategic alliances. Capitalizing on years of experience, the Company offers complete solutions customized to meet the specific needs of each of its clients. The Company intends to form long lasting relationships with its clients and to maximize shareholder value through optimization of capital structure and business planning. Solutions include equity financing, business expansion plans, global corporate finance solutions, and international trade strategies. To read more about Floyd Associates please visit http://www.floyd-associates.com/. If you have questions or comments, please contact us by email at info@floyd-associates.com or call us at: +1 (310) 300-0890.