BANK CHIEFS ‘BULLISH’ ON GCC GROWTH PROSPECTS DESPITE WAR
▶ UAE becoming key hub for global talent and businesses, bankers say
Economic growth prospects for the GCC remain “extremely bullish” due to an influx of global capital and talent, despite challenges posed by the Israel-Gaza war, senior executives of two major global banks said.
The Gulf, and particularly the UAE, has become a key hub for businesses as the region continues to demonstrate resilience amid the Gaza conflict and global economic challenges, the executives said at the World Governments Summit in Dubai yesterday.
The comments come after the International Monetary Fund last month cut its growth forecast for the Middle East and North Africa due to the war. The Washington-based fund projected Mena economies to expand by 2.9 per cent in 2024, down from an October forecast of 3.4 per cent.
The fund also revised down overall growth forecast for the GCC to 0.5 per cent last year, one percentage point lower than its October estimate, but the economy of the six-member bloc is expected to rebound to 2.7 per cent in 2024.
“Whenever I hear these IMFtype figures, it doesn’t resonate with what I see on the ground because there’s just tremendous growth [in the GCC],” Bill Winters, chief executive of Standard Chartered, said during a panel discussion.
“This is an extremely bullish environment despite the fact that there’s a war in the neighbourhood. The Gulf is a sanctuary for global capital and people – and that was clear during [and after] Covid.”
The global economy, meanwhile, is set for a “soft landing” and interest rates in the world’s major economies, including the US, are likely to ease by the middle of 2024, IMF managing director Kristalina Georgieva said at the summit.
“We are very confident that the world economy is now poised for this soft landing that we have been dreaming for.”
Ms Georgieva said a prolonged Israel-Gaza war could have spillover effects on the wider global economies.
“I fear most the longevity of the conflict because [as] it goes on an on, the risk of spillovers go up,” she said.
Mr Winters said he expected the Gulf, anchored by Dubai, to use its position as a gateway for trade and a hub for finance.
“This connector role for Dubai and the UAE [comes] at a time when trade flows are changing fundamentally, where South Asia and Middle East trade, including China, become so critically important,” he said.
Bernard Mensah, president for international at Bank of America, said Dubai has always drawn “terrific” human capital. “What has been really impressive post-Covid has been the crowding in of more of this talent … the abilities come in and find solutions for idea, capital, venture fund, start-ups and growth capital,” he said.
From a global perspective, both executives said the banking industry was dealing with tail risks, or those occurring generally due to a rare event – in this case, the Israel’s war in Gaza. “If you visited our risk committee [meeting] and listened for an hour … it just feels terrible. All the things that could go wrong are there,” Mr Winters said.
However, lenders “are finding a way to enjoy the broadly favourable business environment and prepare for these risks but never to forget the level of human suffering that’s going on”, he said.