NCB Capital, the investment banking arm of National Commercial Bank, Saudi Arabia's largest bank, believes that the GCC region's growing trade and investment links with other emerging markets, along with continued economic liberalization and corporate expansion, will see it evolve as one of the leading global economic hubs within the next decade. Writing in the investment bank's GCC Economic bulletin, Dr Jarmo Kotilaine, chief economist of NCB Capital, said “in contrast to its Western counterparts, the GCC region has emerged from the global economic turmoil with its standing enhanced. Growing emerging market demand for hydrocarbons, supported by deliberate economic diversification, will constitute the backbone of this growth which will see the economy double within a decade.” GCC's relationship with other emerging markets will be an increasingly critical aspect of the GCC region's growth in the coming years. Western demand for hydrocarbons looks to be amid a secular decline against the backdrop of policy changes and structural challenges. The leading emerging markets are likely to further consolidate their position as a source of global growth. Its geographic proximity should enable the GCC to reap the benefits from the growing demand from especially the large Asian markets. Since 2006, Asia has been the GCC's largest trading partner and accounted for 55 percent of the region's total foreign trade of 758 billion in 2009. The evolution of the GCC corporate sector will increasingly determine the nature and pace of growth. The private sector appears well positioned to leverage on the region's structural growth drivers including a positive demographic profile and rising consumer wealth. Huge underexploited opportunities exist in corporate consolidation and SME development. Kotilaine further said the heavily skewed resource endowments remain a key challenge for policymakers. With time, the regional economies will need to reinvent their growth models by means of mobilizing the hydrocarbon windfall and attracting steadily more private investment in the non-oil sectors. Fiscal reforms and infrastructure investments remain critically important. “Continued economic liberalization and capital market development should further enhance the role of the non-oil sector as an increasingly important driver of development. In addition to these factors, greater economic integration will further help the GCC emerge as a leading economic bloc,” he added.
