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2	Oil Prices
3	Capital Flows If remaining proved oil reserves sell for $50/barrel, then: $13 trillion for Saudi Arabia $24 trillion for GCC $38.5 trillion for OPEC Middle East
4	Implications of the Petrodollar Flows The GCC becomes one of the world’s most important investors GCC exceptional GDP growth Inward bias to investment fuels an investment/megaproject boom Unlike Far East, a GCC surge in imports driven by personal consumption spending
5	The GCC’s High Growth
6	GDP Comparison
7	Growth For Non-Oil Economies
8	2006 Forecast (Saudi Arabia)
9	GCC—Important Global Investor Current account surpluses 2005-2007: GCC: $585 billion China: $521 billion Japan: $437 billion GCC official foreign assets growing by > $150 billion/year. Petrodollars to purchase $450 billion in foreign assets in 2006-2007 (IIF)
10	Official Foreign Assets—Saudi Arabia
11	Fiscal Developments
12	Megaprojects
13	Comparing Booms Oil Prices: Crisis-driven and short-lived highs Demand-driven and sustained high prices
14	Spending Trends..Then and Now
15	Stock Market and Oil Prices
16	Opportunities: Demographics
17	Employment—Saudi Males
18	The Challenges Challenges: Unemployment Improving basic infrastructure and social services (education and health care) Containing “growing pains” of high inflation, surging imports, inefficient investment
19	Challenges: Diversification From Oil
20	The 2007 Speed Bump A word of caution: The 2007 economic numbers will disappoint due to oil market softness (flat to negative real and nominal GDP growth). Don’t confuse this short-term cyclical softness with an end to the boom. It’s only starting. The oil market in 2007: Global GDP growth is uncertain, and is the major factor in the 2007 oil market. Opec’s 2007 challenge--cutting up to 2 million b/d of production to defend a $50 floor (they will succeed)
21	Oil Supply in 2007: Opec’s Challenging Year
22	Summary Hard to envision magnitude of capital flows to the Middle East with oil > $50 for many years Current oil boom very different from past Oil boom = economic boom, investment boom, and personal spending boom for the Kingdom GCC re-emerges as world’s prominent investor 2007 speed bump looming with softer oil market