Friday, 3 April 2009

Stupid Arab rich lose $2.5 trillion

The AP reports that Arab world has lost some $2.5 trillion in the global slump created by toxic deals that the global rich seemed to think would grease their wheels for years to come. The total is probably bigger.

Forbes runs the story. Wonder what even a portion of this money could have done for the regions poor.

Read and weep:

Arab financial officials said Thursday that the global economic crisis had cost the region's investors about $2.5 trillion, offering a sobering look at the challenges confronting the region's leaders despite their repeatedly rosy assessments of their nations' ability to weather the financial downturn.

The comments at the start of a two-day Arab Economic Forum focused the spotlight on the damage done in a region that has enjoyed steady growth for the past few years.

Adnan al-Kassar, a leading Lebanese banker and former economy minister, said that among the effects of the crisis in the Arab world was a 20 to 60 percent drop in the region's top stock markets, the decrease in worker remittance revenues and the cancellation of mega projects.

But al-Kassar didn't specify whether the $2.5 trillion in losses also included sovereign wealth funds held by some of the countries. Those funds are secretive and the exact amount of their losses has not been revealed.

In tandem with the equity markets slump, the governments of many of the Arab world's top oil producers are seeing revenue fall as oil prices fell from mid-July highs of $147 per barrel to roughly $50 per barrel at present.

Crude revenues are a mainstay for many of these countries, and the slide is forcing Saudi Arabia, for example, to project a deficit for the first time in 2002.

On a near daily basis, Arab newspapers report layoffs, with some of the most troubling headlines coming from Dubai, the one-time Gulf boomtown now mired in debt.

The job creation issue is paramount for many of the Arab nations. With a surging youth population, Arab governments face daily challenges of providing opportunities to a population that is often courted by Islamists. The ensuing tug-of-war carries broad domestic and international security ramifications.

As a result, Arab nations - particularly in the oil rich Gulf - have been careful to ensure that layoffs stemming from the downturn hit the countries' expatriate workforce, not the much smaller national labor force.

No comments: