Some economies in the Gulf Co-operation Council region are set to outperform the rest of the emerging market world this year, according to new research.
Capital Economics (CE), the London consultancy, says in its latest analysis of the Middle East that, despite falling oil production as a result of weakening in the global economy, domestic demand in the GCC will more than compensate.
"While hydrocarbon sectors may be a drag on growth, it looks like this is being offset by the strength of domestic demand, buoyed by strong credit growth and fiscal stimulus packages.
"Indeed, we expect the Gulf economies to be outperformers in the emerging world this year," said Neil Shearing, CE's chief emerging markets economist.
The two biggest economies in the region - Saudi Arabia and the UAE - will benefit from "robust" domestic conditions, especially in the non-oil sector.
Mr Shearing found that Saudi oil production, the biggest in the world, fell to a 14-month low last December and is now contracting in annual terms.
However, the Saudi non-oil sector is on a continuing growth path, boosted by high government spending as a result of post-Arab Spring fiscal stimulus.
"The government has budgeted a 20 per cent rise in spending this year while credit to the private sector continues to accelerate," he says.
The latest data from the UAE also suggests the non-oil sector is performing strongly, backed by a recovery in Dubai property prices and increasing tourist arrivals, despite the fact that private sector credit growth is contracting in annual terms.
"Bank lending to the private sector is falling. It appears that banks are still rebuilding their capital buffers, possibly to absorb losses if loans to government related enterprises need further restructuring. But in the meantime, this is starving companies of the funding for investment," Mr Shearing says.
Oil output has stabilised recently, but he expects further falls in coming months due to the weakness of global demand.
In Qatar, Mr Shearing says, the rapid pace of credit growth suggests that its non-hydrocarbon sector is the strongest in the Arabian Gulf.
"However, much of the strength in Qatar's bank lending can be attributed to lending to public sector companies. By contrast, lending for consumption and real estate purposes is relatively muted," he adds.
"Bahrain's economy is in an altogether worse state. Political tensions remain high, which is holding back key service sectors - notably tourism. The banking sector is fragile too. Assets are falling in annual terms," Mr Shearing says.