Deutsche Bank chief economist visits Dubai

At a dinner event in Dubai the famous Deutsche Bank chief economist Professor Nobert Walter outlined his own view of demographic developments in Europe which should make the Middle East a very important partner for the future.

In Germany there will soon be more retired than working people, as the birth rate was so low in the 1970s that there is now a serious shortage of working people.

'The position is exactly the reverse in the Middle East,' explained Professor Norbert. 'Here there are many, many children. I think in the future we will, for example, see Iranian doctors working in Europe. In particular, countries like Jordan and Egypt may become important sources of labour for Europe.'

He pointed out that the population problem with just as bad in Eastern Europe and the countries now about to join the European Union.

His broad macro-economic message was that the US economy is in a strong recovery mode in the run-up to the Presidential election in November 2004 thanks to tax cuts, low interest rates and a low dollar policy. This also will help the EU to a modest upturn in economic growth next year.

'In Germany this is partly down to there being four more working days in 2004, so it is not a strong upturn. For 2005 I am worried about the risk that the US locomotive stops puffing. So it is 2005-6 which gives me sleepless nights at the moment.'

Professor Walter also highlighted several other risks to his forecast. He dismissed the present consensus view that oil prices will fall next year, asking 'why should they decline, and for what reason? I think they will stay high.'

Secondly, the fact that the US needs to borrow $2 billion a day from the rest of the world bothers the Deutsche Bank chief economist. 'Will the world be willing to pay? If so will interest rates have to go up to stop the dollar collapsing?'

On balance he expected interest rates to start moving upwards next summer, and considered that whoever follows George W. Bush as US President will have 'the worst job in the world' with the twin deficits, a very weak dollar and the obvious need to increase taxes.

It has to be said that Professor Walter's comments seemed to support the arguments of those who want to invest their wealth in the Gulf region right now. The economic outlook for the rest of the world does not look reassuring at all, except in China, India and possibly even Japan.