According to the McKinsey Global Institute, global debt has risen to $57 trillion and is still reaching new heights. While the world, once again, marches into the perils of a credit crunch, the Arab world is expecting strong growth in its economy this year. Saudi Arabia, GCC’s strongest economy, alone is predicted to experience at least 4.3% economic expansion from 2015 to 2016.
Whether it is UAE’s revived real estate sector or Qatar’s unprecedented GDP growth, the Arab world seems little disturbed by the credit phenomenon of the western world.
What is the reason behind this? Why do these countries remain untouched by the disasters of debt? The reason is simple. They do not favor growth dependent on the weak foundations of debt. A characteristic that seems to help these countries avoid the horrendous amounts of debt seen in the west may be their religion. These countries have a majority of Muslims and Islam prohibits Usury. The Quran, Holy book of Muslims, has deemed any form of interest-based transactions unlawful.
While the recent slump in oil prices may present a risky situation for many Arab countries, their economy seems well tuned to handle it, due to growth expected in the non-hydrocarbon sector. In addition to this, it is still not evident how the recent conflicts among the Arab world countries will affect their fiscal positions, but it may be prudent to state that a deficit in their budget may be expected.
Although every region in the world has its own set of problems, the Arab world remains well guarded against the treacherous after-effects of a credit bubble.
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