In a Middle East experiencing a resurgence of democracy, and for banks in the region too, the past year was the best of times and the worst of times. On the one hand there were the markets most adversely affected by the Arab Spring, such as Egypt, Bahrain and, most drastically, Syria. In these countries, the regional political turmoil is having a negative effect on banking-sector growth and stability, at least in the short term. On the other hand, there are those markets, such as Saudi Arabia and Oman, where higher government spending – in part prompted by regional political pressures – sparked renewed growth in the banking sector. This was at a time, more–over, when many banks had cleared their books of 2008-era bad debt. In hydrocarbon-rich countries – particularly Saudi Arabia but also Qatar – energy prices, which were high as a result of regional politics, benefited banks via both higher government spending and greater confidence. |
