The recent Cemtech Conference in Dubai highlighted some interesting topics, many of which centred upon the current supply patterns for cement in the Middle East and, not least, intense debate over the continuing strength of the UAE market. Many analysts, have for some time been predicting an eventual melt-down in the local UAE construction sector, but this mix of oil, gas and service economies still remains very buoyant, and some local UAE cement producers we talked to were still virtually sold out for several months ahead. Reinforcing this pattern, Dubai city still has very much the feel of a gigantic, ever-expanding, construction site.

On the downside, more new cement capacity is still under construction or in planning throughout the UAE, in effect, pushing up potential local supply to over 25Mt in the near term, possibly even higher and one could be forgiven for thinking that this huge bubble will eventually burst. But quite when, nobody knows. Any views anyone?

A timely report from the World Economic Forum (WEF), the Swiss-based think-tank that attracts a wide variety of celebrity politicians, well-heeled industrialists and pop-stars with attitude, has recently published its outlook for the UAE region in the form of three distinct time-sensitive scenarios stretching to 2025, under the sub-titles: ‘The fertile gulf’, ‘oasis’ and ‘sandstorm’. All scenarios are possible, according to the authors.

Presently, local sentiment in the UAE is generally positive. Enhanced financial liquidity will continue to allow expansion of the private sector, investment in productive assets and upgrading public infrastructure. At the same time, the UAE also faces a range of challenges which could potentially threaten a stable and prosperous future for the country. Even without the threat of external disruption or lower oil prices, the continuing build-up of financial reserves will not last forever.

In fact, says the WEF report, the next five years will be crucial for the UAE and decisions made today could contribute towards building a sustainable and innovation economy, with a more balanced, integrated social structure. Alternatively, a reluctance to engage with controversial issues, coinciding with negative external events could create a future where the UAE enters a negative cycle of conflict and economic decline.

For example, in the WEF ‘sandstorm’ scenario, the current global slowdown causes a fall in oil prices which dramatically reverses when the US bombs Iran in 2009, when oil prices then rocket to US$125 per barrel. The resulting regional instability and oil price shock combined with an economic weakness in the US market then precipitates a further global slow-down, and massive fall in oil revenues …then…well you get the general on-going picture.

Given such a possible outlook,  let’s hope the US public votes in the seemingly moderate Barack Obama for president in November . The Republican alternative: John McCain, might well be turn out to be something of an obamanation (ouch!). And before you plunge into UAE markets, download the full UAE scenario report at the WEF website (www. Weforum.org ) it makes for some interesting reading.