NCB Capital, the investment banking arm of National Commercial Bank, Saudi Arabia's largest bank, believes that the Middle East is now set to become a new global growth engine reflecting an ongoing structural shift in the global balance of economic and financial power. The GCC will be a key beneficiary of this process with favorable growth prospects underpinned by sound government policy and strong structural drivers. In the January edition of its GCC monthly economic bulletin, NCB Capital chief economist Jarmo Kotilaine points to a number of facts that back that assertion: • Attractive macroeconomic fundamentals will likely ensure robust economic growth rates in the years ahead. • Emerging markets have generally experienced a much milder cyclical correction in this downturn. Moreover, ample surpluses accumulated thanks to cautious government policies during the boom years have been effectively mobilized to smoothe over the cycle without creating major new borrowing needs. • Driven by oil, demographics and diversification, the GCC is set to become a $2 trillion economy in the next decade, with surpluses are largely being utilized toward the development of the non-oil sector. Also, with a young population base, the GCC is well positioned to reap the demographic dividend. • The 2010 Saudi budget highlights the strong government commitment to a long-term economic transformation. Education and health care remains the key spending priorities boosting the country's human capital base. The main emphasis of the record SR260 billion budget is on long-term capital spending.
