The crisis spreads

News of SABIC's losses in the first quarter yesterday (its first loss since 2001) weighed heavily on Gulf stock markets yesterday. While not surprising, the announcement serves as confirmation that even regional stalwarts not directly connected to oil, real estate, or finance- the three industries in the Middle East hit the hardest by the global downturn- are beginning to feel the impact of the slump.

Most regional governments have been prosaic about the matter- listing the loses and expecting recovery sometime in the latter part of this year, maybe next. Still, the pace of bad news or announcements of moderation remain a bit troubling for a region that was only just beginning to hit its stride. Today's Business Middle East led with a banner headline that said UBS expects Dubai real estate prices to decline by 70 percent. Capitala, a JV between Mubadala and Capitaland, Singapore, is going to concentrate on low income housing and not take on new projects. Victims of DAMAC scams in Egypt are surfacing, adding to the list of possible indictments from Dubai real estate magnates.

Sure, issues like these are happening all over the world so why should the Middle East be any different? I think I am most troubled by the crisis spreading so deeply and completely here because this is a region who had until recently resisted wide-scale reform and openness. Not a particularly great time to be bitten by globalization. Perhaps having spent too much time studying the Middle East, I would like to see them succeed and not return to the statist models that kept regional economies and governments barely afloat. I guess we'll just have to wait and see how deeply faith in a globalized system is shaken.

Some more interesting articles along these lines-

Diversified Economy Can Pay Strong Dividends

Dubai Chamber of Commerce and Industry Report, April 2009

Lastly, for anyone with access to FT archives, I'd recommend an article published on the 15th of April called "The Price of Globalization"