Page 83 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

Here to Stay: GCC Market Attractiveness and Risks 67

While China’s nearly 10 percent growth rate surpasses that of
any GCC economy, Kuwait, Qatar, and the UAE have all been
growing faster than India while enjoying a GDP per capita many
times higher. Only Oman, with 4.8 percent growth, is below 5 percent.
During the same period, global GDP grew at 4.5 percent yearly and
the core OECD (most developed) economies grew at 2.3 percent.
The GCC is therefore growing almost three times faster than the
world’s most mature markets.
The GCC’s prosperity has enabled the region to accumulate
impressive surpluses. According to 2006 estimates, the combined
GCC current account surplus in 2006 was $193 billion—about
2
$5,000 per person. This aggregate figure is slightly higher than
China’s—$179 billion, according to the Economist—a surplus that
many have seen as an ominous sign of China’s economic rise and
dominance as a trade partner.
While impossible to measure precisely, there is no doubt that
the GCC’s global savings are tremendous. One recent estimate of
GCC private wealth—the vast majority of which is invested
3
abroad—was between $1.3 and 1.5 trillion. The region’s institu-
tional wealth adds to this figure enormously. While extremely
guarded about its figures, the Abu Dhabi Investment Authority
(ADIA) is believed to be one of the world’s largest institutional
4
investors, with assets well over $500 billion. Kuwait and several
other GCC states likewise have investment funds worth tens and
hundreds of billions of dollars. A global economist at UBS
Investment Bank recently estimated that petrodollars are funding
5
up to 45 percent of the current US account deficit. Perhaps most
promising from a macroeconomic perspective is the remarkable
savings rate of certain GCC countries—for example, around 40 per-
6
cent of GDP in the UAE and Kuwait. On a per capita basis, the
GCC’s public and private savings pool is not far behind legendary
Japanese levels.
There is no shortage of evidence of the GCC’s increased pros-
perity. Perhaps most famous are the marquee global investments
made by GCC institutions and individuals, including the Fairmont
Hotels and other luxury properties, a 5 percent stake in Ferrari, the
largest stake in Daimler AG (until recently DaimlerChrysler), one of
the largest stakes in Deutsche Bank, a piece of Aston Martin, a sig-
nificant stake in J Sainsbury’s (the British supermarket chain), and