Gulf unlikely to avoid global crisis: Wolfensohn

“If I look at historic tectonic shifts in terms of economic movements, it is very rare for one area of the world to be left out,” Wolfensohn said at a conference in Dubai today, referring to comments about future growth made by regional governments. “So if I lived here, I would be quite vigilant regarding economic movements. It would be surprising if anywhere in the world will be a place to hide.”

Persian Gulf countries have used six years of soaring oil income to boost spending on infrastructure as they compete to develop the region’s finance, tourism, and industrial hubs. Since reaching a record US$147.27 dollars a barrel on July 11, oil prices have dropped more than 60 percent as the global economic slowdown cuts demand in the largest energy-consuming countries.

Saudi Arabia, the biggest Arab economy, said today it invested in “low-risk and very liquid” assets and the kingdom is well protected to weather the global economic turmoil. The country stashed away US$1.3 trillion in reserves, as the biggest OPEC producer benefited from record oil prices earlier this year, Mohamed bin Suleiman Al-Jasser said. Dubai, the second-biggest sheikhdom in the United Arab Emirates, has “manageable” debt, government-owned Dubai International Capital’s chief executive officer Sameer al-Ansari said today. Moody’s Investors Service said Oct. 13 Dubai may need support to finance its US$47 billion debt, more than its gross domestic product.

“The impact isn’t so dramatic in the Middle East as in other parts of the world, but it is already being felt in stock markets, oil, real estate,” Wolfensohn said. “The most enormous challenge to this region is oil prices.”

Dubai’s bourse posted its biggest seven-day slump ever on concern that the region’s oil and real-estate driven economic boom has run its course.

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