The Gulf Cooperation Council (GCC) countries are expected to see a strong economic growth through the remainder of this year and in 2011, according to a new study.

Blake, Cassels & Graydon LLP (Blakes), a Canadian-based international business law firm, released the study in Bahrain today (April 28) on the occasion of the launch of its Bahrain office.

The study, undertaken for Blakes by Mergermarket, is based on interviews with more than 75 corporate executives from the GCC to gain their perspectives on the outlook for investment and trends in the region over the near term, executives said.

“Blakes has opened offices in Bahrain and Saudi Arabia, in association with Dr Saud Al-Ammari Law Firm, so we are interested in getting the views of corporate executives in the region,” said Brock Gibson, the firm’s chair.

“Thirty-one per cent of the surveyed executives expect growth in the GCC to come through continuing improvement in international economic conditions, while 23 per cent expect it to come as a result of stabilisation of oil prices. At the same time, while the petroleum industry will remain a pillar of the GCC economies, the region is clearly moving toward less dependence on this still very vital industry. In fact, diversification is a recurring theme in the study.”

Eighteen per cent of respondents believe the growth of non-oil industries will be the most important factor fueling economic growth, with 26 per cent identifying telecommunications and 30 per cent identifying either natural resources or transportation-based infrastructure as the sectors that will develop most quickly. These sectors are also said to offer the greatest opportunities for both domestic and foreign investors, the study said.

“Saudi Arabia and Qatar are consistently identified as the region’s most active players for both foreign-investment activity and intra-regional activity, followed by the UAE, which will continue to be an important centre of economic activity,” said Dr Saud Al-Ammari, Blakes managing partner, Saudi Arabia and Gulf Region.

“Forty-six per cent of the respondents expect joint ventures (JVs) to be the most common deal structure over the next year. However, a majority identified local ownership rights and legal/enforceability risks as important factors to foreign investors. With offices on the ground, this is certainly an area where Blakes can help.”

China and India are identified not only as key markets for GCC-based investors, but also as the countries that will lead foreign-investment activity in the region over the next 12 months, exceeding both the United States and Western Europe.

M&A and private-equity transactions will continue to be affected by the global economic climate and the availability of liquidity, with the clear majority of the study respondents – about 70 per cent – expecting consolidation in the region to increase while 31 per cent expecting it to remain constant over the course of the year.

The study also highlighted that most private-equity firms will be focused on restructurings and identifying new opportunities, while M&A will be largely dependent on attractive valuations of assets, with opportunities for distressed assets sales.

“There is definitely optimism about the prospects for this year. Moreover, significant growth and increased liquidity is expected in 2011,” said Dan Fournier, Blakes chair for the Gulf region.

“Most corporate executives believe that growth in the Islamic finance sector will continue, but there will be considerable demand for general conventional debt as well,” he said.- TradeArabia News Service