Jim Armitage: Brits are still basking in the heat of a thriving economy in Gulf states
Compared to more fashionable emerging markets, the Gulf states have enjoyed sustained growth
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Saturday 10 November 2012
Simon Williams is tucking into a cold beer and toffee apples at his kids' school Bonfire Night. But, unlike me at my local firework fest, he's not swaddled up in scarf, hat and boots. Far from it. In fact, he's wearing shorts and a T- shirt.
Is he bonkers? No, just one of the estimated 200,000 Brits living in the United Arab Emirates.
"At this time of year it's perfect – 85 degrees in the day and just perfect, comfortable warmth in the evening," he says.
Mr Williams, an economist, works for HSBC in Dubai. Despite all those headlines and pictures of Ferraris and Audis being dumped with their keys in the ignition by expats fleeing from Dubai airport when the property bubble burst three years ago, he describes an upbeat mood.
"I've lived in Dubai for six years now and I have to say, the economies out here feel really strong compared with the kind of growth rates in the western economies," he says. "Compared to more fashionable, emerging markets, the Gulf states have enjoyed sustained growth for years."
Mr Williams has just co-authored a report into the Middle East region entitled Picking up the Pieces. It's a cautiously upbeat title, nodding to the impact of the conflicts recently ended or still raging across North Africa. His main conclusion is that, if you look behind the frightening headlines, there is an untold story of very strong economic expansion in the Gulf, and even normalisation of economies in the Arab Spring countries.
So it seems David Cameron picked a good time to go and shake a few hands in the Gulf this week. He was mainly there to peddle Typhoon fighter jets – controversial to say the least in countries not known for their strong democracies. But his visit to the UAE, Saudi Arabia and Jordan raised the profile of the region more generally for foreign investors.
Mr Williams admits his rosy report for HSBC seems counterintuitive, given the ongoing conflict in Syria and fears of an escalation of tensions with Iran, but he points out that the political situation in other countries is stabilising month by month, particularly in Egypt, where the new, civilian government seems to be in control. Aid is beginning to flow back in again and the debt markets are signalling a sharp improvement in investors' confidence to lend.
Meanwhile, take a look at the oil exporters, and you see some terrific growth rates. No surprise when crude is changing hands at $110 a barrel. As the populations of the UK and Europe get used to the idea of pretty much zero or negative growth in the coming months, his forecasts for Kuwait, Qatar and Saudi are all between 5.5 per cent and 6.5 per cent this year and none-too-shabby levels of 3.5 per cent to 5.2 per cent in 2013.
The temptation may be to just see these Gulf economies as one homogenous mass of head-dress wearing sheikhs, but that's far from true.
Qatar and Kuwait are massively oil rich and have very small populations to worry about. Faced with little poverty and welfare needs at home, they are free to invest their vast oil revenues abroad.
Saudi Arabia, on the other hand, may be very rich in oil wealth, but it also has a huge and restless population suffering from extremely high unemployment levels.
Dr Adeel Malik, a research fellow at Oxford University's department of international development, says it is crucial that Saudi engineers a more balanced economy capable of employing its huge, young population.
While we think of Saudi as a rich nation splashing its oil wealth around Belgravia and Knightsbridge, what it actually needs is western investment. Mr Cameron will have been spending most of his time discussing Tornados with them this week, but you can bet the Saudis were equally keen to talk about attracting British companies out there. Saudi is crying out for more private-sector businesses, manufacturing goods and offering services: anything to employ the locals when the oil price begins to fall.
To a great extent, the Saudi government is trying hard. It has undergone an epic boost in government spending for several years, with several big infrastructure projects getting off the ground. But that's not the same as getting large numbers of western firms to set up shop there and create real private-sector growth.
Dubai is another species altogether. With no oil wealth, the country has had to rely instead on becoming a service hub, creating industries like banking and tourism literally out of the sand. Western firms are already here in force, but the place is still growing fast enough to support more firms from the west with ease.
Sure, its financial centre still needs stronger regulation, and, as one local said: "Where would you rather be going to court, London or Dubai?" But it does big business, employing thousands of Simon Williamses. Meanwhile, Dubai still has huge wealth coming in from its monster port, which remains one of the busiest in the world despite the impact of sanctions against its major customer, Iran. And as for tourism, Dubai's hotels are rammed, with occupancy rates averaging 80-90 per cent.
The UAE overall, despite being more reliant on gloomy Western nations than all the other Middle Eastern states, is still expected to see growth of 4 per cent next year. Not bad, eh?
All that, and Guy Fawkes parties to boot. Time for more British execs to dust off their passports.
Despite Blair's bluster, we should do business in Iraq
With that shamelessness only a professional politician could muster, Tony Blair this week said British businesses owed it to the "sacrifice" of our troops to go and do business in Iraq.
Never mind it was your blundering wrongheadedness that dragged our brave soldiers out there in the first place, Tone.
He's almost stumbled on a truth, though. We Brits do indeed have a moral debt to make good for our actions. But mainly to the Iraqis whose lives and livelihoods we destroyed.
Western oil companies were quick to get into Iraq and extract the country's minerals, but what the country really needs is for firms to put down strong roots in partnership with local businesses for the long term. Such investments will pay off in rebuilding our reputation in the country, and could make us a bob or two too.
But just don't let Tony claim the credit.
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