A new study by The Boston Consulting Group (BCG) concludes that most of the fundamental drivers in the Gulf Cooperation Council (GCC) region continue to be strong, due largely to oil revenue based reserves ($300bn in cash inflows in 2008), sovereign wealth funds (SWF) and central banks (which combined manage $1.2 trillion of assets across the region) that continue to provide a comfortable cushion for its economies, as well as an overall lack of leverage and limited sub-prime exposure by its banks. Moreover, noted Kamel Maamria, a BCG partner, “the fact that GCC economies are government-driven is a critical stabilising factor in downturns and turbulent times.”

BCG is optimistic about the region’s role in the global economy going forward, although realizing any amount of sustainable global economic influence will depend largely on the measures taken by GCC leaders. “Governments of the Gulf need to redefine the strategic objectives of their sovereign wealth funds, and realign the reserves with the objectives of the local economies. There is no need to create more capacity [in some real estate and some service sectors], rather there is a need to focus on the competitive advantage as well as innovation and some natural areas for investment such as logistics and knowledge industries. We think that there are a good set of leaders here that will be able to focus on helping companies make this diversification into new [non-oil] sectors successfully, and then entrepreneurs will follow suit,” said David Rhodes, senior partner, managing director and global leader of the BCG financial institutions practice. Rhodes added that “there is no better time than now” to make “whole new industries such as nanotech or clean-tech out of nothing,” as well as to make tangible changes in the structure of industries, given the region’s vast resources.