An economist draws unfavorable picture for Arab economics
Regional, Economics, 2/27/2003

An economist has stressed that the Arab economies, despite huge oil resources, suffer a structural weakness and a negative growth, a high unemployment rate and a deterioration in public finance.

Brad Poorland, an economist at the Saudi- American bank, the second largest private banks in the kingdom, said that "the current good conditions hide the points of weaknesses in the Arab states economies." He said before the Financial Islamic forum in Dubai that the Arab states GNP, which does not exceed USD 540 billion, is less than the internal GNP in Mexico.

He explained that "the Arab economies have been developed at a rates that is less than that of the population growth rate, despite the high oil incomes, and the registered growth in 2002." He considered that all these are conducive to an increase in the unemployment rates, adding that the Arab states economies do not create enough job to meet demands.

Taking Saudi Arabia as an example, he stressed that "the process of Saudization" ( replacing foreign workers by Saudis ) will improve the situation, but is not a solution. He added "there are 5 million foreigners in Saudi Arabia including 3 million working as drivers or servants." Work which the Saudis mostly do not accept to perform. He added "in the second part of the job market, there are some 100,000 Westerners who can be replaced by Saudis." He warned "if the process of Saudization will not be carried out properly, work opportunities will decrease instead of increasing." Despite all of that, he considered the situation of Arab economies as not catastrophic, expecting them to witness a growth in 2003 because of the increase in oil prices as a result of the Iraqi crisis.

He also stressed "that the great growth which took place in 2002, should be exceeded in 2003." Concerning the world economy, he said it is witnessing a "recession" and will be witnessing the beginning of growth in the second half of 2003 with the elimination of the Iraqi crisis. He concluded by asserting that the increase in oil prices will be a negative factor to world growth especially in the USA and Europe.

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