1. Economic Development and Globalization Division Financing for Development Section

2. Outline Overview The impact of the crisis on: –The banking sector –Stock markets –Sovereign Wealth Funds (SWFs) –The oil sector –Growth Regional endeavors Recommendations

3. Overview The direct impact of the crisis is felt through: –Declines in equity markets –Liquidity constraints/higher funding costs –Reversal capital inflows Other risks stem from weaker demand for oil… …And from a major correction in the real estate market in some countries

4. The banking sector GCC countries Gross external debtForeign assets 200520062007June 2008200520062007June 2008 Bahrain6.59.126.529.7592831 Kuwait15.422.241.545.6243449 Oman5.87.111.011.63444 Qatar1017.339.343.311182426 Saudi Arabia 31.832.257.875.625364041 The United Arab Emirates (UAE) 40.782.1133.0151.923488781 GCC110.1169.6309.2357.791149233232 Table 1: GCC banks’ foreign liabilities and assets, 2005-2008 In billions of US dollars

5. Stock markets Figure 1: ESCWA stock markets, end 2008 Index loss (%)

6. SWFs FundCurrency compositionAsset allocation Abu Dhabi Investment AuthorityUSD (50%); EUR, GBP, JPY (36%); other (14%) equity (50-60%); fixed income (20- 25%); private equity (5-10%); alternatives (5-10%) Mubadala (Abu Dhabi)USD (40%); EUR(50%); other (10%) equities (60%); alternatives (20%); bonds (20%) Dubai International Capital; Istithmar (Dubai) USD (35%); EUR, GBP (50%); Asian currencies (15%) equities (50%); alternatives (40%); deposits, bonds (10%) Kuwait Investment AuthorityUSD (40%); EUR, GBP, JPY (40%); other (20%) equity (60%); bonds (25%); alternatives (15%) Qatar Investment AuthorityUSD (40%); EUR (40%); GBP, Asian currencies (20%) equities (60%); alternatives (20%); bonds (20%) State General Reserve Fund (Oman)USD (50%); other (50%)alternatives (50%); equities (20%); bonds (30%) Saudi Arabian Monetary AuthorityUSD (75%); other (25%)deposits (10%); fixed income (65%); equities (25%) Table 2: Estimated currency composition and asset allocation of major SWFs, 2007 In percent

7. Oil sector Figure 2: OPEC basket price, annual average (1996-2009) In US dollars/barrel

8. Growth Country/Sub- region Real GDP growthInflation 2008200920082009 Bahrain 6.32.03.5 Kuwait 6.10.710.45.7 Oman 6.01.512.46.0 Qatar 16.07.015.011.2 Saudi Arabia 4.20.79.94.5 UAE 7.40.518.65.2 GCC 5.81.112.05.2 Egypt 6.54.517.19.7 Jordan 6.03.614.06.5 Lebanon 5.53.011.75.7 Sudan 8.54.215.011.0 Syria 6.53.214.76.0 Yemen 4.52.019.012.7 More diversified economies 6.64.013.98.2 Total ESCWA 6.12.112.76.3 Table 3: Real GDP growth rate and consumer inflation rate, 2008, 2009 Annual percentage change

9. Recommendations Continue to apply expansionary fiscal policies, notably in mega-infrastructural projects Pursue the deepening of the intra-regional economic integration: –Establish a Stabilization Fund to cope with exogenous shocks –Increase intra-regional investments, notably in agriculture, agro-business, clothing and footwear –Reorient some of the SWFs’ investments into the region

10. Thank you