The emerging-market share of Gulf Cooperation Council (GCC) trade had reached 45 per cent by 2009, according to the Economist Intelligence Unit, up from 15 per cent in 1980. This share has been rising by an average of 11 per cent annually between 1980 and 2009, compared to only 5 per cent a year for GCC trade with OECD countries.
The region's shift from developed to developing countries as trading and investment partners is explored in a new report ‘GCC trade and investment flows The emerging-market surge' from the Economist Intelligence Unit (EIU), the world leader in global business intelligence. The research for the report, which was sponsored by Falcon and Associates, a Dubai-based company, focussed on trade and investment flows into and out of the GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates).
The analysis of data — sourced from several international organisations and from the EIU — was supplemented by in-depth interviews with senior business executives, academics and investment experts.
The report finds that emerging markets will drive global growth in the years ahead. Around two-thirds of the world's economic growth will be generated by emerging markets in the next five years, the report forecasts. By 2015, emerging markets are projected to account for 41 per cent of global GDP, compared to an estimated 31 per cent in 2011.
The GCC has opportunities to develop as a base for expanding operations of multinationals in Africa and South Asia. The report says Asia will be the most important emerging-market region for the GCC due partly to rising Asian demand for oil, but goes beyond energy. Growing domestic demand in Asia, fuelled partly by an expanding middle class, will produce a host of new opportunities for trade.
Tourism, one of the GCC's competitive strengths, is already benefiting from the growing Chinese middle class.
China is expected to be the GCC's most important economic partner by 2020. India, which has historical and cultural links with the GCC, will also be a significant trading and investment partner. South Korea, Singapore, Malaysia and India will remain important as providers of technology and know-how for the GCC states.
As most GCC countries import most of their food, they are naturally interested in investing in Africa's arable land and establishing export-oriented farming businesses. However, GCC investors are increasingly aware of legal and political risks associated with such investments.
Most GCC investments in emerging markets will focus on tried and tested areas of competitive strength, chiefly energy and services industries such as port operations, tourism, retail, financial services (especially sharia-compliant finance) and telecoms.
Large populations and a shortage of capital in Asia provide an ideal opportunity for the GCC to fill the gap. In the Middle East, growth in Iraq has put a strain on the poor infrastructure, creating further investment opportunities.
The report is available free of charge at: www.eiu.com/sponsor/ falcon/south-south .
