MANAMA: World economies appear to be recovering from the financial crisis but a much more serious economic crisis is up ahead, warns a business expert.
The new economic crisis is expected to continue for the next 10 years and have a major impact on the West, causing deflation and the bankruptcy of about five Europe countries, said Talal Abu-Ghazaleh.
However, emerging countries such as China and India are expected to flourish and the GCC will see at least 10 per cent growth, he added.
"The world has gone through financial crisis which has almost been contained, but what is much more serious is the economic crisis that is coming," said Mr Abu-Ghazaleh, who is Talal Abu-Ghazaleh Organisation chairman and founder.
"The US has witnessed a 2.5pc growth, so you would say this is nonsense and that the US is back to growth but I think this is due to increased consumer demand because of the liquidity the US government pumped into the market and not representative of a recovery.
"The US and the rest of the developed world are heading for hard economic crisis for the next 10 years.
"It's a structural crisis because the developed countries' structure is wrong and is made worse by the crisis because the private debt has shifted to the government.
"Governments are becoming less able to provide services whether education, health, employment, pensions, etc and unemployment is up.
"We must look at our relations in this context. We must realise we are in a changing paradigm and need a new relations paradigm."
Mr Abu-Ghazaleh was speaking at the Bahraini American Cultural Exchange Society's first Power Hour Speaker Series held at the Movenpick Hotel.
The business expert said the US dollar was expected to devaluate in the coming years and would cease to be used as a reserve currency.
"The future is for US and all Western products to decrease to make them more competitive, so the West is going from inflation to deflation," he said.
Mr Abu-Ghazaleh predicted that five European countries will go bankrupt next year, which will not mean they "close shop" but they will be unable to provide services to citizens.
However, Brazil, Russia, India, China and Korea will grow at a steady rate during the next 10 years, he said.
Africa in 10 years will be on the same economic level as developed countries and become like Europe in 50 years, he added.
He said the GCC region will have more than 10pc growth mainly because of its oil revenues.
"Qatar is already at 20pc growth and next year it predicts 26pc growth," he said.
"The GCC region is one of the beneficiaries of the crisis and has tremendous opportunities ahead to build itself and its infrastructure.
"But if all the oil was exported today it is not enough to make the infrastructure in Europe, so all of these resources will need to be invested.
"All of the Arab world should benefit from the boom in the Gulf and as we have seen investments in the Arab world are the safest."
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