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Breaking away from a general global trend of economic gloom, the GCC nations are showing signs that they would recover reasonably in the next six months.
What is the reason for the current uptick in confidence?
Higher oil prices are the key reason behind the confidence boost in the GCC, which are showing strong, but uneven, signs of encouragement, says Standard Chartered Bank.
If oil prices continue their current trend, GCC states will reap $114 billion of extra revenue this year, the bank says. It forecast an oil price of $75 per barrel by the end of this year from a current $70 odd.
"This is significant. To put the number into perspective, it is bigger than the size of the entire GCC debt market before the current crisis (around $100 billion)," Standard Chartered says.
The UAE's property sector, where prices in Dubai have fallen more than 50 per cent from 2008 peaks, is also stabilising.
Mortgage providers are slowly easing their requirements, allowing for higher loan-to-value ratios and credit procedures have been relaxed. The first signs of stabilisation in Dubai's real estate sector have appeared, the bank says.
Gulf stock markets are rallying and investors are returning to regional bond markets, a 'tangible' sign of investor confidence being the number and success of recent corporate and sovereign bond issues.
International investors are also returning to Gulf stock markets, Standard Chartered says, "signifying their renewed appetite for the region".
Meanwhile, Dubai-based investment firm Shuaa Capital predicts that Gulf economic conditions will improve over the next six months with Oman being the only country where a decline is expected.
The prediction is based on a survey of the investment community which found that 60.6 per cent of respondents expect an improvement in economic conditions on a six-month horizon in the GCC countries, while 31 per cent see no change and 8.5 per cent expect a decline.
The balance of investors indicate a major jump of 21.5 per cent for the improvement of economic conditions in Qatar in May (52.1 per cent) compared to 30.6 per cent in April. The same is true for Saudi Arabia, which witnessed a 20 per cent increase in May (60.5 per cent) over last month (40.5 per cent).
The economic indicator for the UAE also demonstrated a jump by 15 per cent while Oman is the only country witnessing a decline in expectations for economic conditions.
The economic picture continues to vary between each of the six GCC countries. For instance, 43.7 per cent have a positive view on Saudi Arabia's economy, while 33.8 per cent are neutral and 21.1 per cent are negative.
This reveals that the investment community perceives Saudi Arabia as the strongest economy among all markets in question.
A similar scenario is true for Qatar, where 42.3 per cent see the economic conditions as positive, 36.6 per cent as neutral and 22.5 per cent as negative. In comparison, 47.9 per cent view the current economic climate in the UAE as negative, while 38 per cent have a neutral view and 11.3 per cent take a positive stance.
Saudi Arabia is seen as leading destination for capital with 40.8 per cent of investors planning to invest there in the next six months, 25.4 per cent undecided and 19.7 per cent deciding against investing in the kingdom.
This compares very similarly to Global Emerging Markets (GEM), where 40.8 per cent of respondents intend to invest in the next six months, with 19.7 per cent undecided and 23.9 per cent saying they do not plan to invest in the region.
While Saudi Arabia and GEM performed the best in the survey, the GCC was not far behind - 16.9 per cent of the balance of investors have decided to invest in GCC countries within the next six months, and just 9.9 per cent have decided to invest in Bric (Brazil, Russia India and China) countries.
In line with the optimistic outlook for rising stock prices, combined with the majority of investors assessing individual markets as undervalued, it is not surprising that so many of the respondents, have indicated that they are planning to invest in GCC markets, particularly Saudi Arabia, within the next six months, with 36.6 per cent responding with a yes, 32.4 per cent undecided and 19.7 per cent saying they will not invest.
Qatar and the UAE had fairly neutral feedback in terms of investment in the next six months, recording on balance 2.8 per cent and 1.4 per cent, respectively. Bahrain (-35.2 per cent) Kuwait (-29.6 per cent) and Oman (-29.6 per cent) are all not likely destinations for capital with poor on-balance responses.
