If you want to know which direction the GCC economy is heading, always check the oil price.
The global economy is more interconnected than ever, and so is the GCC economy. And no other sector of the global and local economy is a more reliable indicator of future trends than the oil price.
Statisticians could play all day with different numbers, and they would struggle to find an example that disproves the theory that when the oil price is strong, the GCC economy is strong. When the oil price is weak, so is the rest of the GCC economy.
Being a journalist, I could only be bothered to compare three variables: Brent Crude oil price, the GCC All Share Index and Dubai land sales.
The graph above begins in May, 2008, which was the peak month for Dubai land sales (which is affected by volume and the price of the land (I have calculated May 2009 by multiplying the first 10 days by three)). It was also just about the peak of the GCC All Share Index, and two months before the peak oil price in July.
The relationship between the oil price and GCC shares is almost perfect. Dubai land sales have underperformed - not surprising when you consider the massive bubble that was created in the run up to summer last year.
So, which way now for the GCC economy? Well I’m no expert in commodity trading, but I know an organisation that is. PMV Oil Associates predicts that oil will approach $63 dollars per barrel in the coming weeks and will rally to $78 within the next six months. (www.arabianbusiness.com/555058-crude-oil-price-to-hit-78-within-6-months).