Page 41 - Aamir Rehman Gulf Capital and Islamic Finance The Rise of the New Global Players

26 PART I Background and Context

the like—that are required for long-term economic competitiveness. 11
Senior leaders in the Gulf remember a time when the region was in
need. Today, the world recognizes Gulf capital—the fruits of GCC
prosperity—as a new global player on the rise.

LARGE—AND GROWING—RESERVES

Over the past decades (but largely in the boom years of the 2000s), the
economies of the Gulf have accumulated significant reserves.
Consider the following figures:

■ As of 2006, Gulf economies had about $1.9 trillion in foreign
assets built up over the past decades. 12
■ This pool of foreign wealth corresponds to over $47,000 per
person living in the Gulf, and over $70,000 per GCC citizen. 13
■ In contrast, the public debt of the United States in 2009 is over
$11 trillion. This corresponds to over $37,000 in national debt
per person living in America. 14

These figures are truly striking and reflect the changing topogra-
phy of the global economy. For every Gulf citizen born in 2006, the Gulf
economies had a pool of foreign assets more than three times the
region’s annual GDP per capita. In the United States, however, for each
baby born today, there is a national debt of about one year’s GDP per
person. Put roughly, a GCC citizen is born with national assets over
three years ahead of the game, whereas an American is born with a
national debt about one year in the hole. Large national debts can also
be seen in the United Kingdom and other leading economies of the
Organisation for Economic Co-operation and Development (OECD)
world, making the GCC’s accumulated wealth all the more remarkable.
Not only is Gulf wealth significant, but it’s also growing. Figure 1.1
envisions the potential growth of GCC foreign assets under three dif-
ferent scenarios.
If the oil price per barrel for the period 2007–2020 averages $70,
the McKinsey Global Institute forecasts that the GCC will hold for-
eign assets of about $8.3 trillion by 2020. If the average price of oil is
$100 per barrel—a scenario that appeared likely in early 2008 but now
is in question—the foreign asset pool would be $10.3 trillion. 15
Therefore, Gulf foreign assets may grow to three or four times their
2006 size in the decade ahead.