At the OPEC targeted floor price of $50 per barrel, the Gulf Cooperation Council (GCC) countries will cumulatively earn $4.7 trillion by 2020. This will be 2.5 times their oil earnings over the last 14 years, according to “Global Megatrends 2009”, a report by Ernst & Young. Middle East economies are predicted to be a real growth story for the next few years, even as the region has not been immune to the effects of the global downturn. “Regional economies are well-placed to capitalize on opportunities emerging from the crisis, despite the fact that there are some concerns over issues related to the tightening of the credit markets and softening of property prices,” said Phil Gandier, head of Transactions Advisory Services at Ernst & Young Middle East. “These increased earnings will allow GCC economies to buy additional assets globally or finance local infrastructure developments as many other economies stall. Their relatively moderate regulation and tax regimes will be even bigger attractions as European and US business environments tighten under the pressure of the ongoing global recession,” he added. Countries like Egypt, Iran and Vietnam have been identified as potential rivals to BRIC countries (Brazil, Russia, India, China), as well as some developed economies in future. The study indicates that the global economic landscape is changing and emerging markets are playing an increasingly significant role. Economic power is moving from developed to emerging economies - from West to East and North to South. Emerging economies accounted for 44 percent of global GDP in 2007. While projected GDP growth rates for major developed markets in 2009 are now predicted to lie between - 0.2 percent and 0.5 percent, emerging markets are expected to grow at 6.1 per cent on average, with China (9.3 percent) and India (6.9 percent) performing even better. The growth of emerging economies may be less than was projected before the financial crisis, but they still demonstrate considerably stronger growth than the developed world. Their hunger for growth, alongside their rapidly industrializing economies and growing populations should set them on the path to recovery more quickly. In the case of China and Russia, their huge accumulated reserves (China with $1.9 trillion and Russia with $560 billion) are expected to ease the pain. Multinationals (MNCs) in emerging markets, previously little-known outside their own countries or regions despite their colossal size, are now challenging the mega corporations of the West. They are seen as becoming global champions in many industries. Attributing the growth to the confidence and scale of MNCs in emerging markets, the study says that ten largest emerging market companies had combined revenues of $1 trillion in 2008 - more than the GDPs of Australia or The Netherlands. Other trends include the rise of sovereign wealth funds, private equity and hedge funds as the new power brokers. Their combined assets quadrupled between 2000 and 2007 to reach $11.5 trillion. However, in the short-term, hedge funds and private equity firms will be under pressure. “We expect private equity and sovereign wealth funds to first stabilize after dealing with the immediate impact of the credit crisis and then to take bold positions in various industries and economies with a long term view. The funds that overcome the current challenges of economic uncertainty and its impact on their holdings and develop a clear strategy for putting money to work in difficult credit conditions will have bird's eye view of the emerging macroeconomic landscape.” __
