Many of the Gulf states are experiencing an economic boom, which cannot be solely attributed to high oil prices.

The dramas of Iraq and Israel are not the only major events taking place in the Middle East. While international attention focuses on the political crises in these hotspots some significant economic developments in the Gulf are passingrelatively unnoticed.

As bombs blast Baghdad many states in the nearby Gulf are experiencing an unprecedented economic boom, with growth rates nearing 9% in the case of Qatar, and huge amounts of Gulf liquidity wanting to come back and find a domestic investment home.

Clearly there is a direct relationship between higher oil prices and Gulf economic performance but this boom is underpinned by much more than the bulging budget surpluses and huge opportunities in project finance which are obviously key economic drivers.

Qatar, for example, has invested heavily in its North Field gas reserves and revenues from this are beginning to multiply as more gas becomes available. Bahrain and Dubai are beginning to harness some of the region’s huge financial muscle and create financial opportunities for the estimated $1400bn in GCC funds parked abroad. The ambitious Bahrain Financial Harbour and Dubai International Financial Centre projects demonstrate this.

In most Gulf states the private sector is expanding fast and more sophisticated economic and financial tools are helping to quickly develop investment opportunities, more diversified financial structures and more diversified economies.

Naturally, the spectre of political instability hangs over the region and recent bombings in Saudi Arabia do not help. But the picture on the ground always looks different than it does from outside and from Washington, in particular.

Longer term, the Gulf states remain the premier repository of the world’s oil and gas and now they are beginning to build the ancillary infrastructure to further strengthen their economies. Gulf financial institutions such as National Bank of Kuwait and Ahli United Bank are also spreading their wings to become regional institutions.

The economic boom in the region is real and underpinned by strong fundamentals. Yes, political instability is a factor but the economic reality should not be ignored.

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter