A surge in government spending across the Middle East is expected to draw greater numbers of investors in emerging markets towards the region, according to people attending the UAE Global Investment Forum.
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Last Updated: May 04, 2011
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A number of stimulus measures have been announced in countries around the region, including Bahrain, Oman and Saudi Arabia. The measures are widely regarded as attempts to fend off political unrest.
However, delegates said the clear definition of Abu Dhabi's vision 2030 for economic diversification, alongside the low inflation and political stability found in the UAE, offered the most obvious opportunities.
The UAE's network of partnerships was helping to steer the country towards further growth, according to Mohammed Omar Abdullah, the Undersecretary of the Abu Dhabi Department of Economic Development.
"Established strategic alliances with different parts of the world … helps in overcoming adverse impact as a result of the pace of change," he said.
Mubadala Development has announced a shift in focus towards emerging markets as the strategic investment company owned by the Abu Dhabi Government studies investments in Brazil, Russia, India and China.
Rainer Schwarz, the regional head of international institutional clients and asset management for Itau Unibanco, said a rebound in growth in emerging markets was finding its way to the Middle East. The bank, based in Sao Paolo, is the largest financial conglomerate in the southern hemisphere.
Latin American investors were looking to match their natural advantages to areas where the UAE is lacking, such as food security, Mr Schwarz said. "They want to capitalise on the big themes - the hydrocarbons on one side and the services and consumer-related sectors that make up the bulk of GDP on the other.
"Lots of Brazilian corporates and Latin American corporates are already present in Abu Dhabi and the UAE. With a range of local governments and local institutions looking to develop their interests in Latin American states, we're trying to foster such partnerships," he said. Brazilian companies are also keen to participate in construction projects in Saudi Arabia, Mr Schwarz said. King Abdullah announced a spending plan in March, valued at 250 billion Saudi riyals (Dh244.83bn), to build 500,000 houses, after unrest threatened political stability in the kingdom.
However, Dr Florence Eid, the chief executive of Arabia Monitor, an economic research company, said the threat of further political instability would cloud investors' outlook for the Middle East in the near term.
"We're entering into a decade where a lot of states around us will be volatile." The potential threat of spillover from states such as Yemen and Syria remained a significant question mark for the region, she said, and countries such as Egypt would remain troubled if investments did not materialise.
Wealthy Gulf countries such as the UAE would be best placed to play a leading role in ensuring regional co-operation on investment. "Nobody else has the money after the financial crisis," Dr Eid said.