NAI Global Report on Middle East Paints Optimistic Picture

War? What war? Violence? What violence? Those words literally don’t appear in “Stuck (Happily) in the Middle (East) with… Money!” a new report from NAI Global, which suggests that diversifying economies and rapid growth are well on their way to transforming the region from its energy-only past into a future with a more solidly based prosperity. The report, written by NAI Global chief economist Peter Linneman, Ph.D., is available free at www.naiglobal.com/docs/may08_middleeast.pdf. Average annual real GDP growth in the Middle East, the report notes, climbed from under 4 percent in the late ’90s to 6 percent in 2007. Among the report’s insights, Linneman told CPN, “It was surprising to find that, to date, there is no apparent impact of the capital market disruptions taking place in the U.S. and Western Europe,” The report emphasizes the major progress a number of Middle Eastern states have made in fiscal and financial-sector reforms and “overall fiscal discipline.” Economic diversification in the region, according to the report, is based heavily on real estate and infrastructure projects, as well as shipping, trading and investments. Linneman’s report notes that Dubai, for example, currently gets less than 10 percent of its GDP directly from oil. Other, perhaps surprising, factors also enter the picture. “Of the few parallels one can draw between the U.S. and the Middle East,” Linneman wrote, “we draw a parallel between what we have long claimed is a bedrock of strength for the U.S.–hungry immigrants who come to strive in one of the greatest free market economies of the world–and what seems to be part of the driving force of the Middle East economic development.” The report notes that countries importing proportionately larger amounts of labor have tended to outperform those that don’t import as much labor.