Eurozone Crisis Threatens Gulf

Dire economic growth in the Eurozone is a threat to trade, investment and expansion in the Gulf region, local economists and market analysts warned on Tuesday. According to new data, the 17-nation bloc grew by just 0.2 per cent on a quarterly basis with analysts expressing particular concern over sluggish GDP growth in Germany, which had been driving Europe\'\'s economic recovery. \"The problems in the Eurozone will have an effect on the GCC because we are heavily connected to Europe as a trade and investment partner. If Europe does not address these issues we could be on the verge of a crisis that would put [the collapse of] Lehmann Brothers in the shadows,\" said Nasser Saidi, chief economist at Dubai International Financial Centre, reported Gulf News . \"The Eurozone crisis is a great matter of concern for Gulf-based private investors, as well as local sovereign wealth funds, because the GCC countries are net exporters of capital and they are at risk of sustaining substantial losses across their portfolios,\" he added. Gulf investors, already reeling from last week\'\'s turmoil on global equity markets following the United States\'\' credit downgrade, are now digesting the latest bleak figures from the Eurozone as the prospect of a double-dip recession continues to grow more likely. \"The common factor in both the US and the Euro-zone is the potential for a full-blown sovereign debt crisis. We have moved away from the initial crisis in the private sector, where governments and central banks took over non-performing assets and, in many countries, effectively formed a nationalised banking system; the debt scenario has moved from a personal liability to an aggregated national liability,\" Saidi said. \"It is a matter of trust and risk aversion is rising rapidly across debt and equity markets. If we enter a full-blown debt crisis, it is unclear who is going to be doing the rescuing,\" he added. \"Germany\'\'s disappointing GDP numbers have renewed fears of a potential slowdown in economic recovery and most global markets saw a sell-off across the board yesterday,\" said Marwan Shurrab, vice-president and chief trader at Gulfmena Investments