21/10/2014 06:35 AST
GCC economies are perusing investments in the right direction, addressing infrastructure needs and investing in sectors that will create more opportunities in the long run, says a report.
Standard Chartered has published the latest edition of its quarterly Global Focus. The report looks at how 2014 is drawing to a close for the world economy, and what we should prepare for as we enter 2015.
Economic dynamics in the Middle East and North Africa (Mena) region are increasingly diverging between the GCC countries and the rest of the region, says gthe report.
In the wider Mena region, the fundamental challenges are a lack of resources to introduce the necessary measures to reduce social and economic pressures, and ongoing political transitions.
The GCC, on the other hand, enjoys strong social and geopolitical stability and a hydrocarbon sector that has created wealth and supported investment.
This has driven record growth rates in the region in the past five years. Diversification remains fundamental to the region's economic stability in the long run.
"We are on track to seeing better growth in 2014 versus 2013," head of macro research Marios Maratheftis said.
"Our theme for the year was transition, a motif that applies to China and the US.
"China is rebalancing, with policy makers working to boost consumption and services relative to investment, manufacturing and construction," he added.
"Inevitably with this rebalancing comes a slowdown, but China will have to accept this to achieve sustainable growth in the future.
"Although transition will remain a driving force in 2015, we also expect 2015 to be a year of a great divergence.
"We expect a divergence in monetary policy, with the European Central Bank going ahead with quantitative easing and the Fed raising policy rates.
"There is also the additional divergence between economic performance and asset prices.
"Asset prices have been rising globally, despite disappointing growth rates in the US and Europe.
"Liquidity and central banks are increasingly becoming the driving forces of asset performance," he said.
"We expect growth to reach 3pc in 2014, up from 2.7pc in 2013," he added.
Following recent disappointing performance in the US and in particular the euro area, emerging markets are once again leading growth, the report says.
"We expect US growth to remain 2.2pc in 2014, the same as 2013. The prevailing market view earlier in the year, that 2014 growth was going to be driven by US and European recovery has yet to materialise.
"Performance in Europe continues to disappoint. Its economy is suffering from inadequate demand and excess savings.
"The large current account surplus, now around 238 billion euros, which some see as a sign of strength, is actually a symptom of the problems the euro area faces; namely, depressed salaries and the lack of demand." Some blame the slowdown on seasonal effects and geopolitical developments, the report. adds.
Gulf Daily News
Please wait...
