Monday, October 27, 2008

WSJ: Gulf economies' positives in current turmoil

any assessment of their future should take into account the region's achievements in the past five years of plenty -- not least a forecast $150 billion in budget surpluses for 2008.
unless oil does fall below $30 a barrel, the International Monetary Fund reckons most Gulf states can comfortably balance their budgets because they've marshaled their finances better than in previous booms. Another sign of that is the estimated nearly $2 trillion in assets that the Gulf's sovereign wealth funds have under management. The Gulf states are also running more diversified economies thanks to the partial opening up of financial markets and encouraging foreign investment in property and utilities, though much activity remains in state hands.
The Gulf's dollar currency pegs appeared a big handicap only a few months ago.

Now they seem like an advantage as the dollar surges against major currencies and makes up for some of the sudden drop in oil prices and takes the heat out of domestic inflation just as local demand eases.


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