May 25, 2011
Improved economic outlook for GCC ‘enhances global confidence’
Seetharaman says Middle East will become a significant market for global investors in the coming years.
Doha Bank Group chief executive officer R Seetharaman gave an outlook on both global and GCC economies while explaining the current scenario in the global economy and the basic challenges world economies face in moving from crisis to stability at the Second Annual Arab Investment summit 2011, which concluded yesterday at Yas Island Rotana, Abu Dhabi.
International and Arab bankers, economists, top business and investment professionals and key industry players participated in the two-day event.
“Global economy is expected to grow at 4.4% in 2011. The sovereign risks are mainly in the eurozone. In the GCC (Gulf Cooperation Council) region, GDP at current prices in 2011 will rise to 1.4tn, reflecting a growth of 29% over 2010. Qatar’s real GDP will grow at a rate of 20% in 2011.”
He also noted that the current account balance of the GCC will be 124% of GDP at current prices on account of high oil prices in 2011, noting that the improved economic outlook for the GCC region and progress in the UAE restructuring improved global investor’s confidence in the region.
Seetharaman highlighted the foreign direct investment trends in Middle East and measures taken to encourage it.
”Saudi Arabia has attracted nearly $147bn in foreign direct investment (FDI). The second largest Arab FDI destination is the UAE, which has attracted in excess of $74bn,” he said.
However, the official pointed out that in Qatar, FDI had grown up by 45.7% in 2009.
“Laws are planned to improve support for small and medium enterprises and overhaul of insolvency laws. The new tax law in Qatar, which came in 2010 has brought down tax rate to 10% and is more favourable for foreign investment,” he said.
In Qatar, foreign investors’ capital can exceed the 49% limit based on a decision from the Minister of Business and Trade in certain selective sectors. Jordan has begun to encourage international business leaders to invest in the kingdom. The corporate tax rate reduction has made Oman’s rate standing at 12% down from 30%,” Seetharaman said.
He also provided insight into the fiscal policies in the region, stating that Qatar has projects worth more than $100bn underway. GCC budgets are on the expansion mode in 2011, which will provide more opportunities in various sectors for global investors.
“In Qatar, the services sector would account for 40% of output by 2016. After 2012, 5% of additional public sector investment spending would be needed to generate 0.5% temporary acceleration of growth in non-hydrocarbon output. Hence, non-hydrocarbon sector in Qatar provides significant opportunities for global investors,” he pointed out.
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