Forecast: The Persian Gulf in 2010
My conversation with colleague and friend Nouriel Roubini continues today on our political and economic expectations for key regions in the year ahead. Today, we move to the Persian Gulf. Bremmer: It’s much smoother sailing this year in the Persian Gulf, despite Dubai’s well-publicized troubles and the multiple-front fighting in Yemen. Saudi Arabia is looking especially ...
My conversation with colleague and friend Nouriel Roubini continues today on our political and economic expectations for key regions in the year ahead. Today, we move to the Persian Gulf.
My conversation with colleague and friend Nouriel Roubini continues today on our political and economic expectations for key regions in the year ahead. Today, we move to the Persian Gulf.
Bremmer: It’s much smoother sailing this year in the Persian Gulf, despite Dubai’s well-publicized troubles and the multiple-front fighting in Yemen. Saudi Arabia is looking especially strong. The oil price rebound has boosted the Saudis more than many other oil producer thanks to its conservative budgetary assumptions, and it looks as though the eventual political succession process will be handled smoothly. Most importantly, the Saudis are realizing the potential of long-neglected sectors, regions, and segments of the population. The socially more liberal Bahrain is doing the same. Abu Dhabi has politically stabilized the UAE.
Roubini: The collapse of oil prices during the global recession led to a massive slowdown of growth in the Middle East, but the recovery of oil prices from a low of $30 in early 2009 to levels ranging from $75-$80 in recent months has triggered a recovery of growth and an improvement of fiscal conditions. Dubai’s troubles may reverberate in other parts of the Gulf, where a real estate bubble took place, but they will otherwise be contained. Policymakers throughout the Middle East have the medium- to long-term challenge of investing in infrastructure, education, health, and other public services to improve the skills and economic opportunities of growing numbers of young people, diminishing the political threats that rising Islamist movements in both Sunni and Shia countries engender. As long as oil prices remain at current levels, the budgets of the region’s energy-exporting economies will allow this crucial structural transformation and modernization of these economies while containing risks of social and political unrest. These structural reforms need to be accelerated. In countries like Saudi Arabia, a lost generation of youth raised on Islamic education alone lacks the skills to be productive in a modern economy.
Ian Bremmer is president of Eurasia Group. Nouriel Roubini is a professor of economics at New York University’s Stern School of Business and chairman of RGE Monitor.
Ian Bremmer is the president of Eurasia Group and GZERO Media. He is also the host of the television show GZERO World With Ian Bremmer. Twitter: @ianbremmer
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