The Middle East Economy

Turkey’s second-quarter GDP growth, released by the central bank on September 11, surprised on the up side, with an 8.8% year-on-year (y-o-y) rise that easily surpassed the 6.4% expected by the market. Growth is down from the 11.6% posted in the first quarter, however, and a looming slowdown in the eurozone has many concerned about Turkey’s exposure.

Oman’s economy has become more competitive in the past 12 months, according to a recent report, and is steadily making the transition from having an efficiency-driven economic base to an innovation-powered one, a process that will gain further momentum thanks to increased government budget outlays.

Qatar looks set to retain its position as the world’s fastest-growing economy this year, with the country’s core sectors performing strongly and diversification continuing apace. While many economies worldwide are still sluggish, or face the prospect of slipping back into recession, Qatar is expected to see 21% real growth in 2011, according to a recent report by Doha-based financial institution QNB Capital.

Saudi Arabia’s economy looks set for a period of sustained growth, with oil revenues remaining high, non-hydrocarbons exports on the rise and the effects of a massive investment programme by the state starting to kick in.

The central bank (CB) took several measures in August in an effort to reverse the sharp decline of the lira against global benchmark currencies. Since November 2010, the lira has lost approximately one-quarter of its value, and slid 13.5% against the US dollar so far this year, as international investors have steadily removed their money from Turkish markets.

Strong financial indicators in Kuwait have seen the country rewarded by a ratings upgrade. On July 20 Standard & Poor’s (S&P) announced that it was raising Kuwait’s long-term sovereign credit rating from AA- to AA, with a stable outlook. According to the credit rating agency, the economy’s strengths include high GDP per capita and healthy fiscal and external balance sheets, factors that have been accorded greater weight under S&P’s recently revised methodology for rating sovereign credit risk.