Arab financial officials said that the global economic crisis had cost the region’s investors about $2.5 trillion, offering a sobering look at the challenges confronting the region’s leaders despite their repeatedly rosy assessments of their nations’ ability to weather the financial downturn.
The comments at the start of a two-day Arab Economic Forum focused the spotlight on the damage done in a region that has enjoyed steady growth for the past few years. It came as leaders of the Group of 20 wealthy and developing nations met in London to discuss a path through the world’s worst financial crisis since the 1930s.
Adnan Al Kassar, a leading Lebanese banker and former economy minister, said that among the effects of the crisis in the Arab world was a 20 to 60 per cent drop in the region’s top stock markets, the decrease in worker remittance revenues and the cancellation of mega projects.
“Estimated losses of Arab investments abroad are about $2.5 trillion,” said Al Kassar, who currently heads the General Union of Arab Chambers of Commerce, Industry and Agriculture. The “drop in oil prices affected revenues in (oil-producing) countries, and expectations are that growth in the Arab region will drop to about 2.9 per cent in 2009 after an 8 per cent growth in the past two years.”
But Al Kassar didn’t specify whether the $2.5 trillion in losses also included sovereign wealth funds held by some of the countries. Those funds are secretive and the exact amount of their losses has not been revealed.
In tandem with the equity markets slump, the governments of many of the Arab world’s top oil producers are seeing revenue fall as oil prices fell from mid-July highs of $147 per barrel to roughly $50 per barrel at present. Crude revenues are a mainstay for many of these countries, and the slide is forcing Saudi Arabia, for example, to project a deficit for the first time in 2002.