DUBAI, June 6: Gulf states must institute major diversification of their oil-dependent economies and open up to foreign investors to boost sustainable growth, the International Monetary Fund (IMF) said on Friday.

“For the Middle East and the Gulf economy more generally, this is certainly a difficult period but it seems that the region has weathered recent storms relatively well,” managing director Horst Koehler said in Dubai.

“We expect growth in the region to recover to about 45 per cent in 2003. More is achievable and there is further need for structural change.”

Kohler called for “major diversification of the region’s economy and providing a strong basis for opening up to attract more investors and also more transparency.

“The Middle East as a whole will benefit” from Iraq’s reconstruction, Kohler said, calling the region an “integral part of the world economy and a key player in the process of global cooperation.”

Kohler, who met Gulf Cooperation Council finance ministers and central bank governors in Qatar on Thursday and Arab Monetary Fund officials on Friday, said he was “impressed” by the commitment of the six GCC countries to regional cooperation.—AFP