Muslim world: prospects for future growth

Society Pakistan & World Affairs
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Re: Muslim world: prospects for future growth

^ OG, let me put it to you this way. FII flows to India are already at $8B in the first 8 months of this year, last year they were $6.9 for the whole year.

Fund management is a dirty business. You don't need Nobel winners to run a fund. You need people with a roll up your sleeves attitude. Flowsbetween emerging marketscountries are growing at double digit rates. This is just public markets. Private investments are also sky rocketing. The pie is not static, it is growing.

You are just talking about long short equity funds I assume, they are avging around 5% this year. When minimum investment is $1m, that is $50K a year. enough to pay for your russian mistresses' shopping.

I am referring to allocations even hudgefunds have now as part of diversification strategies into structured products, like PIPES and growth capital investing for private companies.

Well we can talk abou this all day...but I have a question? What are the growth prospects within the muslim world? Even with OIL at $67/barrell, why is the forecast for Saudi going down? Why hasn't it been able to preserve it's high of $22K per capita income of 1982? why is it at $7K a year. I need ot know....khailafah say what?

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It's really obvious that the purpose of this thread is to bash a specific community, while at the same times proving how superior the other powers, in specific India are, it's really all about forcing down the opinion that there is really no hope for future growth. No other opinion will be tolerated. Throw all your andaas and timatars, people, come on! "Healthy discussions" and GS -- what an irony!

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Re: Muslim world: prospects for future growth

^ forget India...if that makes you happy. tell me what is the muslim world doing to get a piece of the global pie? Which is the holy grail that will provid for an ever increaisng population and ever decreasing resources within the muslim world? why should I ven have to ask these questions? shouldn't you people be discussing it? by burying your head in the sand, doesn;t make it go away.

AQ Bhai ki Shaadi
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Re: Muslim world: prospects for future growth

And what is your point PD? Any natural disaster can set these countries back several years. Fiscal mis-managment is possible.

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Re: Muslim world: prospects for future growth

sanest post in this thread

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Re: Muslim world: prospects for future growth

PD_

Good post. Reading GS report, once finished will have a response, until then here's my two cents: Where countries are now deciding how and where the global economic pie will be shared, Muslim countries are trying to hang on to their existing frontiers. When countries are in a survival mode it is not easy to project their 5year plans leave alone 50years. The way global energy demand is rising, supply receding its very probable that exisiting muslim maps will undergo some serious changes. It has happened before when Muslim states as we know them today never existed at start of the 20th century.

I know this is a divergence from your thread, my apologies but geo-political uncertainities cannot be excluded from longterm economic forecasts.

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Re: Muslim world: prospects for future growth

Tsunamis, 9/11’s, earth quakes…see today’s FT. An oil price increase to $70 barrell for a sustained period of time will have an negative impact of no more than 1% in countries like china, India and the US for that year.

And kids, do you not realize that people at GS realie that perishable commodities like Oil, which the peak production has not even hit yet and forecasted to be somewhere in the next ten years, are ever decreasing? No one knew in 1890’s that muslims would own an asset so hugely important and due to their closed minded approach to a changing world, would fk even that up. But with established monetary, financial and techonological systems in hand, one has hte ability to forecast much further out.

The worst thing that can happen is alternative energy dependence for the muslim world. It will happen..it has to. We, I mean people, would have exhausted this energy source (blame US, CHina and INdia) in the coming 25 years…We, I mean people, will act based on reality on the ground (example…when America was attacked by the Japanese, it took less than 2 years to turn detroit from making packards to making tanks at a scale that the world had never seen) When this happens, what will the muslim world do. I ask again.

Take Pakistan for example. A nation,with incredibly brilliant people, which is the lead sector of the economy that will deliver dividends. In a generation, Pakistan can be at 200M people, most of them young. What are they going to be doing?

FG, that is a cop out. You don;t think S Korea, India, China, Brail, Chile, among others have territorial disputes? I think it is in the psyche…wherever muslims are in a sizeable minority there are problems. Everyone can’t be wrong. Maybe th problem lies within the muslim mindset. Maybe this yearning for separation in an ever integrated world doesn’t have a place. So time to choose or be left out.

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If only women were allowed to to join in these discussions......

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Re: Muslim world: prospects for future growth

PD, Hi there

Finished reading GS article, not very different from other recent analysis (NIC, Businessweek)which have focused on China+India (Chindia) economic potential. Since the idea of the thread is to comment on Muslim states, I will refrain from making any comments on the validity of GS article.

I agree with your view, many other countries have serious territorial disputes China+Taiwan, UK+Spain, India+China+Pakistan+etc etc, yet they are able to prosper. In my defence, I will say that it is only Muslim states who have been put on notice by the Bush administration for showing more responisibility and prove their ability to be member of nation states. Has any other country been put under such a microscopic inspection? I do not think so.

Muslim states or developing countries all face the same question? What are they doing to mobilize their millions for improving life styles and rising per capita incomes. GS articel lays out the conditions which are needed for such growth stories ie macro stability, institutions, education and ?? forget the last one. These are primary determinants for any successful business models. Let me add another, Gradualistic. These changes cannot be thrusted down peoples throat ala Russia, we all know its impact, but following the Chinese gradualistic models should be applied.

Iam optimistic that the Muslim world will and has already initiated changes in their societies which will benefit its people and allow them the opportunity to enjoy this tsunami of economic prosperity courtesy Chindia. Take the example of Dubai, Qatar, Jordan, Oman, Bahrain though small in size but significantly important as sources of petrodollars. Those who have not yet followed will be forced once their people see the difference in their lifestyles and those of their compatriots in neighbouring countries.

As for Pakistan, changes have already been put in place and we are seeing a material shift from their past. Unfortunately, our histroical baggage of Jihadist+Klashinkof+Drug culture has deep roots and is not an easy task which will take time and effort.l Then again, Pakistan has the advantage of being positioned right next to the Chindia economic revolution and providing access to the energy resources of Central Asia.

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^ FG, chinese is not a gradualistic model. If anything, it is more rapid than anything else out there. As far as Bush putting the muslim world on notice...this is another one of those copouts. Victimhood deserves derision not consolence. National and ethnic interest is not just a one way street. America also deserves the same right to establish an order in it's national interest just as the muslim world thinks about the ummah and other pipedreams.

The muslim world as I see it, is too mired in it's history which has been often at times quite exclusive to include itself in this changing world. Pretty soon, people around the world would simply decide to disengage ala africa then deal with cultural attributes that prevent any returns on capital let alone bon homie

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Re: Muslim world: prospects for future growth

The one thing that has not been discussed much here is security. Economic growth cannot procede under a cloud of violence. It has not ever and will not ever work. To the extent that Muslim countries form a financial bloc to trade within the Muslim world, they will succeed, at least in a limited way. However the remaining 4/5ths of the world will remain largely untapped, so long as there is violence and radical violent politics in Muslim countries.

When five years from now these BRIC countries are far larger and more powerful than today, Muslims will undoubtedy say "Why not us?". Knowing Guppies as I do there will be rampant denial, accusations of racism, and running from blame. Quite simply, Muslims believe that the Western World should simply close its eyes to the upheaval in the Muslim World and keep doing business.

Muslims worldwide must recognize that there is a choice for each Western industrial company. They can build widgets in China or they can build widgets in Pakistan. To the degree security needs add expense or complexity, Pakistan will become less competitive. In my experience most Guppies here deny this is true, wish it were not true, or do not recognize Western fears as legitimate. Turmoil is a millstone around the neck of Muslim countries.

The reality is, most Muslims do not percieve today that there will be economic consequences from todays headlines. For the time being, the lack of growth is masked in higher oil prices that are a windfall to Arab countries. Countries like Pakistan however who are energy consumers are having their economies success masked by one time events. What one time events? First, the lifting of US sanctions related to Nuclear testing were hampering economic growth. Second, one cannot discount the effect of debt relief and aid to the Paksitani economy. Third, tensions have wound down with India. Lastly, Pakistanis pre 9/11 believed that their money was safer overseas than in Pakistani banks (This is true for most Muslim countries, not just Pakistan). Post 9/11 many began to mistrust Western Financial institutions, and feared that thier funds would be caught up in some freezing action related to the US war on terror. The newly repatriated funds caused huge capital inflows to Arab banks, and other countries, and was of course reinvested by the banks. This one time repatriation effect provided a temporary springboard for economic growth. But, just as a one time injection of capital can be good, at some point thing will normalize and there may again be outflows. Today lack of foreign investment is masked by locally available capital, but that is not a lasting effect.

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Re: Muslim world: prospects for future growth

For the Western writers there is confusion (even these days) about Islamic world vs. Arabob world.

Sure there is no hope for Arrabob world. Tribalism and orthodoxy will keep them impoverished for the foreseeable future. There may be few city states like Dubai trying to modernize. The rest of the region will remain backwards.

how easy is it for u
how easy is it for u
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Re: Muslim world: prospects for future growth

^ Goldman Sachs and Mckinsey are not western writers…these are perhaps some of the most diverse firms out there who hire simply based on your intellectual prowess. :snooty:

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Re: Muslim world: prospects for future growth

China not a gradualistic model? More rapid than anyhing else out there? I will have to disagree with u there, Chinese are famous for there deliberate gradualistic approach towards modernization and bringing about change in their society. Looking at the rapid pace of development TODAY may give an impresion of quick fire changes, but u have to look at the chinese expereince from its starting point ie back in the late eighties and early nineties, Joe Stiglitz has written a well documented commentary on Chinese policies how they were able to fend off IMF dictates and were successful in the end.

How can u ignore Geo-political changes, it doesnt matter what the reason for such turmoil exists, for our discussions sake we have to factor in the macro stability into expected growth propositions for any nation state. No macro stability means no foreign direct investments=no new technology=nono money=no jobs=economic stagnation.

Purpose of this thread was to enquire about the Muslim countries growth potential in light of Chindia economic optimism, how Bush implemets his foreign policies will have a material impact on this region. WHat happens to Iraq, Iran and Saudi Arabia wil have longterm repercussions, good or bad Iam not saying but certainly we cannot then compare such a region with countries who do not share the same threat. Its like comparing a emerging market index with a develeoped world index without any risk adjustment.

As for your comments on the Muslim population, I share some of your pessimism but not all is lost, call me an optimists, fact is 1.4billion ppl will have to be accounted for in any global economic thesis. Failure to do so, will be a grave mistake.

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Re: Muslim world: prospects for future growth

OG, points u have enumerated can be categorized as one time events, but their influence and impact on Pak economy are of much far reaching nature. Removal of sanctions by US and European countries means increased markets for Pak exporters, now that is not a one time event. Similarly, it allows US companies to deal with Pak Govt/Cos leading to increased trade benefits. US/Japanese/Europeans aid agencies have poured money into Pak education/social sectors which will alleviate many of the past problems and reduce Govt responsibility leading to further fiscal stability.

I agre with u on debt releif and repatriation of Paki investments, then again this was made possible because the State has shown political/fiscal responsibility, if such policies are followed consistently then benefits should continue to accumulate.

Let me add a few extremely imp points that need to be highlighted describing Pak economic improvement. (1) Lowering of interest rates or easier monetary policy (20% rates dropped to 5% by end of 2004, bouncing to 9% YTD).
(2) Restructuring state entities, cleaning their balance sheets and turning loss making entities into profit institutions ie Steel mill, PIA,
(3) Privatization of state owned entities ie HBL, UBL, PTCL, OGDC, PPL

I will be the last person to say Pak has done enuff to prove its worth, on the contrary Pak Govt has just taken its first few steps towards a better future and needs to travel miles before it can be assured of a sustainable growth profile with a civilized society contributing positively to global affairs.

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FG< china and most dictatorships bring about change in the most sweeping of fashions. Be it cultural revolution, be it de-maofication, be it de-dengizing...in china, change has happened all too quickly every time. Since 1978, the economic policies that china has adopted were some of the most liberalizing in the world. Much more so than S Korea and even Japan. Only caveat was ownership of assets with control resting in China. People buy into it because of proposed future exists to capital investment. Something which even now is hard to garner in china, say compared to India. But it doesn;t stop FDI. Simply because liberalization is happening faster and faster there than other places.

Iraq, Saudi and Iran comprise of what percentage of muslims around the world? How Bush implements his foreign policies is no different than how America implemented it's foregin policies since 1941. Bush's foregin policy is the same as FDR's or Truman's or Eisenhower's or Kennedy's or Reagan's or clinton...be it fascists, communists or now the islamists. The first two lost, third will never even get to a stage of prominence because of the incompetent model.

This whole 1.4 billion mantra is tiresome. There is no 1.4 B, there are pockets of muslims, as different in their aspirations and capabilities as there are other 5 b people in this world. The 1.4 B are relevant as individuals and nationstates, not as some monolithic bloc as many here would profess. Most of the population lives outside of this ME clusterfcuk. Simple equation, many in the develping world are leapfrogging manuf to services in the road to develpment. When humans don't produce as much by their hands any more, they need to trade the produced goods and services and develop instruments that allow for secondary adn tertiary markets for these trades to happen. To give you an example...the Global CDO market (pooled debt instruments) is now at $800B, this is in only 5 years. Do you know how many Islamic banks offer this to their investors, institutional or even Private client groups? NONE...

You can talk about all the friggin Bush foreign policy and how it would be a grave mistake for the muslim world to not be part of an integrated global economy. The truth of the matter is the discrminatory behavior doesn;t come from the west or kaffirs, it comes from the muslims. "Interest is haram" is always a 4+ page thread on gupshup. It is the mentality that needs to change or the abolity to delineate dogma from spirtuality, which is the muslim world biggest bane of existence.

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PD
Iam in agreement with u with regards to Muslim mindset and urgent need for reform, niether am I trying to hide behind our much overused whipping boy excuse. External factors do impact psyche of people which translates into increased/decreased extremism. I do not question Bush/American need to formulate/implement its foreign policies, but when they dusrupt muslim societies in such a manner which destroys any chance for moderate, sane voices to try and bring about change then criticism of US foreign policy is justifed. 1.4B may be in pockets like u correctly pointed out and are not an ummah much to their own consternation, but states like Egypt, pakistan, Bangladesh with sizeable populations are being affected directly in terms of increased sympathy for the extremist elements in society. External funds will not change soceities, niether will increased trade liberalization or feeble attempts to portray themselves as soft states. Serious steps need to be taken for the battle of ideas within muslim communities and for that purpose it is imperative that those who are trying to reform society have credibility within the community.

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FG,

I really had not focused on Privatization, and that is indeed an important event. Russia, Ukraine, and other states have had massive privatization efforts, with mixed results. Undoubtedly the huge influx of cash to the government of Pakistan will help enormously. As I understand it however, most of the investment in the Telecom spin off was out of the UAE, Qatar, Bahrain, Saudi etc. The pool of capital willing to invest in Pakistan is still largely limited to the oil rich Muslim countries. Unfortunately these Muslim countries are massively terrible managers of money.

You would think that after selling all that oil that Saudi would have huge quantities of excess capital. that is not really true. When Saudi wants to build a new pipeline, or devlope a new oil field, they do not have the capacity to do it themselves. They require Billions in investments from Western oil companies for the build out. There are also analysts that insist that the Saudi Oil fields have already seen peak production, and that very few new oil fields have been found. That pool of capital has funded Islamic growth for years, and has artificiallly held the standard of living in Muslim countries higher.

So the Oil pool is slowly drying up, and the Islamic world hase very little to show for all the petro dollars that have been pumped. Absent oil what is going to drive Muslim economies?

Nikammay flooders [merged flooding threads]
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Re: Muslim world: prospects for future growth

Two words for you OG: “Phone rooms.”

Nikammay flooders [merged flooding threads]
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Re: Muslim world: prospects for future growth

OG,
Totally agree with u, privatization has had its problems in countries with poor practices and weak institutions. Petroeconomies of the Gulf do not have much experience in managing assets overseas but are flush with cash looking for principle protection, diversification away from oil and higher returns. Fortunately for Pakistan, right policies directed towards privatization has attracted Gulf money into telecom, energy and banking sector. Future returns will determine whether Gulf decision makers were smart investors, its too early to pass judgement on their sagacity.

Saudi production worries got prominence when Simmons came out with their investment report, then again u have a point, what will Muslim states do when they do not have oil? Difficult to say when hardly any effort is directed towards improving the social indicators.