Prepared for Gulf Future Visions Workshop 14 October 2009 by Dr Kim Houghton Strategic Economic Solutions International and national economic trends Implications for Gulf-Savannah communities

Global financial crisis Origins – Long period of global growth and easy credit – Highly leveraged business models – Complex financial market instruments – Undervaluing of risk – Deregulation of markets AND globalisation Outcomes (‘real economy’) – Credit crunch – Finance sector failures – Global recession -2 to -4% world in 2009, +3.2% in 2008 and expect +1 to 2% in 2010) – Commodity prices fall off a very high

Australian impacts End of resources boom – Prices fell first – a lot – Volumes mixed – some up, some down Big difference between outright falls and ‘lower rates of growth’ Tightening of lending criteria – Business borrowings very low, consumers still borrowing A$ sharp fall then rise against USD – 63c to 86c, last year was over 90c Recession? – Working hours reduced.. And jobs? Very low interest rates

Gulf economy ABARE Australian Commodities, June Qtr 2009

What to do? Global momentum will trump GFC Regional economy – Diversify economic activity – Ramp up value-adding – Maximise local flow-ons from big projects Business resilience – Diversify income streams – Identify high margin aspects of business and review for growth potential – Keep costs under control – Plan for change in main markets