Investment boom in the Gulf

Is globalization a blessing or a curse? Opinions are divided. What is not in dispute, however, is that anyone wanting to slow down or even stop the globalization process is doomed to failure. Yet it is still interesting to watch how the various developments are affecting various parts of the world and how they are responding to them.

While the Europeans are busy running on the spot and the Chinese struggling to prevent their economy overheating, economic developments in the Arab nations of the Near East rarely make headline news. News in this part of the world generally has to do with politics, not business. Yet the Gulf states are no less successful and certainly no less ambitious than any other emerging states. Blessed with the security that comes from sitting on some of the world’s richest oil reserves, the oil sheiks in this region are already planning the role they intend to play in the globalized world of tomorrow. One thing is clear: They will not content themselves with the role of commodity supplier indefinitely. Instead, they have set their sights on the whole supply chain, from the oil they pump to the finished product. In terms of sheer scale, the investment boom that has been unleashed in pursuit of this goal is just as breathtaking as that in China. With oil prices likely to remain high, the Kingdom of Saudi Arabia, for example, can expect to see its GDP grow in real terms by around seven percent this year (you can read more about specific projects in our Business Section from pp. 10).

But it is not just those countries that are blessed with huge oil reserves that are now poised for a great future. Bahrain, for example, has been growing in leaps and bounds these past two years and has even come up with some prestige projects of its own to match the manmade islands of Dubai. And even Iran, which is already producing to capacity, has been so spurred on by exceptionally good results two years running that it, too, is now growing at a rate of more than four percent (2004/2005). 

The prospects for service providers and suppliers are therefore very rosy at present. In addition to engineering and know-how, the demand for both consumer goods and capital goods is similarly buoyant. The only question mark is how long the boom will last and how things will look once the tidal wave of globalization has ebbed away again. One thing is surely clear, the countries of the Near East will be among those to profit most from this development. After all, this is the moment they have all been waiting for.

-Frank Jablonski-