By IANS,
Dubai : The Gulf will emerge as an important player in the global economic order even as the current financial crisis enters a phase of stabilisation, says Rajat Gupta, former managing director of consultancy major McKinsey and Company.
Gupta, who is here to attend the ‘Leaders in Dubai Business Forum’, told reporters that the present crisis has entered a phase of stabilisation, but its impact on the world economy would be felt for years to come.
“We are probably getting ahead of the game, whereas previously we were just reacting,” reports here quoted him as saying on the sidelines of the forum.
Stating that coordinated steps by governments across the world have taken the risk out of the market, he said: “I hope this will be a period of stabilisation.”
He attributed the current crisis to “too much leverage and way too little regulation”.
“I do think that the financial industry may have gone a little overboard in terms of leverage. CEO compensation will be getting a closer look,” he said.
At the same time, he warned against overregualtion, saying that would again lead to problems.
Gupta, who is also an independent director at investment bank Goldman Sachs, said that the Gulf Cooperation Council (GCC) economy would continue to remain strong even as it became an important part of the world economic order.
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) comprise the GCC.
Asked when exactly he expected the GCC states to emerge out of the current crisis, he said: “I really do not have any answer to that question but the region will see good growth.”
Earlier addressing the delegates at the forum, he said: “It’s time we recognise a new reality of the world. There will be new power brokers and a realignment of the financial flows of the world.”
According to Gupta, the wealth of Gulf nations is founded on oil reserves and this will be further propelled by economic diversification policies being adopted by governments of the region.
“The growing power of Gulf states has become a central factor in the geo-political and economic landscape,” he said.
He also urged the Gulf nations to focus on education and healthcare.
“There should be more institutions of higher learning. I assume they (the governments of Gulf states) are prioritising this as it is vital for the improvement of the region, irrespective of the price of oil,” he stated.
He also dismissed theories of decoupling national economies to lessen the impact of the global crisis on countries.
“Many talked about decoupled economies such as India, China, Middle East and Russia. Of course, there will be impact but there are strong fundamentals in these economies,” said Gupta, who is also an independent director of the Qatar Financial Centre.
“There is growth in terms of population and this implies that there will be significant growth but less than what was expected. However, it is still good and I hope that is part of the solution to this problem,” he said.