Despite the oil and property bust, some Arabian economies are looking better than you might expect.
Take Saudi Arabia. While oil accounts for 50% of GDP and the economy is set to shrink by 1.1% this year, it’s “in a more comfortable position than most”, says Reinhard Cluse of UBS. Large savings from the oil bonanza and low debt mean “very substantial room for anti-cyclical fiscal policy”. The property market is “relatively stable”, says Shady Shaher of Standard Chartered. Banks have low real-estate exposure and few bad loans thanks to “stricter regulatory controls”.
No other regional markets have quite the same combinations of strengths, but Qatar is “uniquely positioned to weather the fall in oil prices”, thanks to new liquified natural gas production coming onstream, says Michael Wang of Morgan Stanley.
Meanwhile, Egypt’s sound financial system and “conservatively managed” banks should help to outweigh its exposure to falling tourism and a high fiscal deficit.
On the downside, Kuwait is delaying much-needed economic reforms, while the real-estate bust and associated banking sector problems in the United Arab Emirates will drag on.