29/09/2009
Sept 28, 2009
Gulf powerhouse Saudi Arabia and some other Arab countries voiced cautious optimism that economies were on the mend, with the United Arab Emirates seeing an improvement in lending conditions and liquidity.
Oil producers in the Gulf region have boosted spending with Saudi Arabia, the biggest Arab economy, alone committing more than $400 billion to underpin growth.
Saudi central bank governor Muhammad al-Jasser said there were no signs of contraction in the local economy. Forecasts by several banks predict a fall of around 1 percent for the G20 member this year.
"There is no contraction in the local economic indicators," he said on the sidelines of a meeting of Arab central bank officials in the UAE capital, Abu Dhabi.
The UAE, the second-largest Arab economy, said lending conditions and liquidity were improving but conditions remained fragile.
"The gap between loans and deposits is narrowing because liquidity is steadily improving but I think the economic situation in the UAE and other countries is fragile," central bank governor Sultan Nasser al-Suweidi told reporters.
The UAE economy might shrink or grow slightly in 2009, Suweidi said. "Growth will be small if there is any," he said, adding that banks' third- and fourth-quarter earnings could be lower due to the provisions as well as the global crisis.
Banks across the Gulf region have seen earnings hit by provisions to cover their exposure to troubled Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi & Bros and central bankers have indicated more would be needed.
"We have advised banks for (first) half year results up to the provisions to 50 percent of exposures to the groups," Bahrain's central bank governor Rasheed al-Maraj told reporters, reports Reuters.
