The Middle East

The banking industry looks set for a period of consolidation and belt tightening, with many of Dubai’s analysts predicting an easing of profits and an increase in non-performing loans (NPLs) for the near term. Though mergers and restructuring by some local lenders is expected to produce a leaner sector, it should also become stronger and thus better able to meet the demands of the rapidly changing financial landscape.

Key elements of Abu Dhabi’s economic diversification programme, including the development of the emirate’s manufacturing base, are moving ahead as planned, with the government reiterating its commitment to encourage investment and diversification.

Sharjah’s push to increase the role its tourism sector plays appears to be paying dividends, with hotels reporting higher occupancy rates and airlines adding the emirate as a destination.

Political and economic reforms promised for 2012 are expected to improve Jordan’s business environment and restore confidence after a challenging year.

Capital markets in Kuwait, like those in many GCC countries, are currently experiencing a challenging period, with investors largely staying on the sidelines in light of global economic uncertainties. Nonetheless, positive signs have recently emerged from the country, including the potential for two bond issuances in the near future, as well as the successful completion of a six-month transitional phase for the Capital Markets Authority (CMA), the country’s first independent stock market regulator.

High domestic spending and sound levels of liquidity are expected to offset any adverse effects of Europe’s debt crisis on the Saudi Arabian economy, and the Kingdom looks set to maintain its solid growth for the remainder of this year and into the next.