Gulf leaders see economies growing despite crisis

RIYADH - Finance ministers and central bankers from the oil-rich Gulf said on Saturday they expect their economies to continue to grow despite the global financial crisis and a sharp drop in oil prices.

By (AFP)

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Published: Sat 25 Oct 2008, 9:54 PM

Last updated: Sun 5 Apr 2015, 2:26 PM

Policymakers meeting in Riyadh “reaffirmed their confidence in the stability” of the financial sector of the six-nation Gulf Cooperation Council, they said in a statement issued at the end of the meeting.

The officials underscored the “strength and solvency” of the financial sector in the Arab states of the Gulf and stressed they can weather any impact from the global financial crisis, the statement said.

Participants in the meeting “expect Gulf economies to continue to grow by good levels,” it added.

They voiced satisfaction over measures taken in the region to deal with any impact from the world economic crisis and expressed readiness to take any additional measures, the statement said.

Stock markets in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates have taken a severe battering this month, losing some 200 billion dollars.

Saturday’s gathering in Riyadh came as the Saudi bourse, the largest in the Arab world, lost nearly nine percent to sink to its lowest point in four years.

Part of the aim of the GCC summit was “bolstering confidence in Gulf (stock) markets,” GCC Secretary General Abdulrahman al-Attiyah said in advance of the conference.

Attiyah insisted that the fall seen across Gulf markets in recent weeks was “unjustified.”

“Gulf financial markets initially have no links to the real reasons behind the (global) crisis,” he said.

Fears of a liquidity shortfall have also loomed over Gulf banks because of the global credit crunch, with the banks having limited ability to borrow on the international market.

Governments across the Gulf have already stepped in to shore up slipping confidence in their financial sectors by injecting -- or pledging -- huge amounts of liquidity into their banking systems.

Saturday’s meeting came after OPEC, the Organisation of Petroleum Exporting Countries, announced on Friday that it will slash oil output by 1.5 million barrels a day from November 1.

Saudi Arabia, along with the United Arab Emirates, Kuwait and Qatar, account for more than half of OPEC’s official production quota of 28.8 million bpd.

Gulf nations are facing a sharp drop in oil income which contributes 80 percent of their public revenues, with oil prices down by more than half since hitting an all-time high of above 147 dollars a barrel in July.

The Riyadh meeting comes three weeks before the United States hosts an unprecedented summit of the world’s richest nations and emerging economies to discuss the global financial crisis.

Saudi King Abdullah will be the only Arab leader to attend the November 15 event in Washington.

As the GCC meeting ended, the Riyadh bourse’s Tawadul All-Shares Index (TASI) closed 8.7 percent weaker at 5,624.68, having dropped as low as 5,564.96 points, a level last seen in May 2004.

The fresh selling means the index has lost around 20 percent in the past eight days as the Riyadh market continues to reel.

The fall on one of the few markets open on a Saturday suggested no end is in sight for the rout which caused heavy losses on Friday on most stock exchanges worldwide.

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