In This Article
- Exhibit 1: In 2006, the foreign assets of companies, sovereign wealth funds, and wealthy individuals in the Gulf Cooperation Council (GCC) states topped $1.9 trillion, because of rising oil prices.
- Exhibit 2: The GCC states will earn oil revenues of almost $9 trillion by 2020 if oil prices remain at $100 per barrel.
- Exhibit 3: Oil prices will determine the volume of wealth that the GCC states could invest.
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Surging oil prices have turned member states of the Gulf Cooperation Council (GCC)—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)—into financial powerhouses, and they’re just getting started (Exhibit 1). Their companies, sovereign wealth funds, and wealthy individuals could invest trillions of dollars beyond their borders by the end of the next decade, according to new research from the McKinsey Global Institute (MGI).1
The GCC states already hold roughly $2 trillion in foreign assets, maintain large stakes in companies from Sony to Nasdaq, and have purchased, outright, companies like GE Plastics and Barneys New York. MGI research estimates that exports of crude oil will earn these states $5 trillion to $9 trillion from 2007 to 2020 and that they will invest 30 to 60 percent of their oil windfall abroad. The price of oil and the apparently increasing amounts that the GCC states invest domestically will determine how much of this money flows overseas.
MGI’s conclusions rest on a combination of interviews (shedding light on the GCC’s shifting economic goals and asset allocation strategies) and economic modeling (which employed a national-accounting approach...