The study titled 'The Gulf as a Global Financial Centre: Growing Opportunities and International Influence' examines the prospects for the economies of the Gulf Cooperation Council (GCC) countries and the potential development of the region as a Global Financial Centre.

Elaborating on Dubai's leadership in the region's financial industry, the study pointed to Dubai's high ranking in the City of London's Global Financial Centres Index (GFCI) for March 2008.

The Index ranked Dubai 24th, ahead of cities like Shanghai, Stockholm, Brussels, Mumbai and Madrid. The Chatham House report highlighted the fact that, outside Europe and North America, Dubai was ranked fifth in the world in the London survey.

Dubai was also cited by the survey as being the number one among financial centres to "become significantly more important over the next two to three years." As a destination where businesses are thinking of opening in the next few years, Dubai was ranked number one. Bahrain was ranked 39th while Qatar was ranked 47th in the overall GFCI Index.

Omar Bin Sulaiman, Governor of the Dubai International Financial Centre (DIFC) commented:

"Dubai's high international ranking in the global financial industry is a tribute to the economic vision of HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. His guidance has inspired the development of the DIFC, the institution that has primarily been responsible for transforming Dubai into a global financial centre. With the new initiatives being undertaken by DIFC, Dubai is poised to develop further as an industry hub that rivals many of the world's most prominent financial centres."

Extrapolating from the GFCI report and its own estimates for economic and financial sector growth, Chatham House said the GCC could overtake both Australia and Tokyo in the rankings over the next decade.

The GCC economy has approximately tripled in size in just five years and the combined GDP will be well above USD1tn in 2008, while the states' external financial wealth in the form of sovereign wealth funds (SWFs) and foreign exchange reserves alone is more than double this figure, the study said.

Dr. Paola Subacchi, Research Director for International Economics at Chatham House, London explained:

"The report shows the great dynamism of the GCC economies and their capacity to be serious players in the world economy. Chatham House is particularly pleased to have worked together with the three financial centres of the region - DIFC, QFCA and Bahrain EDB - for the completion of this project which further contributes to put the GCC under the spotlight".

The GCC 'brand', which has been very successful in promoting the visibility and image of the region, should be actively pursued to further enhance market power and credibility, the Chatham House study suggested.

"Economic growth and wealth creation," it said, "will continue to provide the big punch behind the 'brand'."

The study further talked about the need for GCC countries to "aggressively" correct the tendency for observers to view the region as a 'developing economy'. The GCC's average GDP per capita is now almost on a par with many developed economies such as Spain while its non-energy GDP per capita is well above emerging-market levels, it noted.

Cautioning policy-makers in GCC countries against ad hoc experimentation in policies that could endanger growth and the region's 'brand' the study said, "any changes in the exchange rate system should be carefully coordinated to enhance confidence and avoid potential confusion and volatility in regional cross rates, which might be both distracting and damaging to the image of GCC cohesion. The move to a common currency would avoid such pitfalls and offer a significant boost to financial-market activity."

A critically important development to meet both investor needs and the GCC's financial market aspirations would be the creation of a larger, deeper debt market, whether based on Western-style bonds or the Sharia model, building on the region's strength in Islamic finance, the study said.

"If successful, this move could open up a much larger role for the GCC in global debt markets, especially across the Middle East and Asia. This would be sufficient to provide a massive 'hinterland' within which the GCC's financial markets could operate, allowing them to succeed in achieving the target of becoming a global financial centre," the study pointed out in cocnlusion.