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Last Updated: Thursday, 29 June 2006, 13:21 GMT 14:21 UK
Mid-East 'learns oil-boom lesson'
Construction in Dubai
Middle Eastern countries are pumping money into growth
The Middle East has learned lessons from the past and is enjoying the current oil boom with restraint, the World Bank has said.

Instead of frittering away profits from high prices, countries in the area are pumping them into development schemes.

For example, Saudi Arabia has cut its domestic debt almost by half, boosting economic growth.

But the Bank also warned that to sustain growth the Middle East would need to expand its private sector.

Diversity urged

In an interview with the AFP news agency, the Bank's chief economist for its Middle East and North Africa branch, Mustapha Nabli, warned that countries should not become too reliant on oil revenues.

Instead they should diversify their economies in order to produce enough jobs and move the focus away from oil reserves that will eventually run out.

"This (growth) is coming because you have an increase in public expenditures which is multiplying and creating jobs but this cannot sustain itself as such," he said.

"A long-term solution is private investment to create new activities, new projects and increase productivity."

However, the Bank's report said that the behaviour of Middle East countries is changing.

They are no longer building up huge debts by betting that oil prices will remain high, as they did in the 1970s and 1980s.

This time "there's a realization that they can't do things as before," said Jennifer Keller, report author and senior regional economist.

Oil exports have more than doubled over the past three years in the oil-rich nations - Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Libya and Oman.

This economic boost lifted growth in the region to 6% in 2005, compared with 3.5% in the late 1990s.

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