State funds in Gulf hydrocarbon producers could suffer from a fresh bout of losses because of the European Union debt crisis following a sharp decline in their assets in the wake of the 2008 global fiscal distress, a well known Gulf economist has said.
While the EU economic slowdown means slackening oil demand and consequently lower crude prices, Gulf countries and other OPEC members have taken measures to offset the crisis and keep prices strong, said Mohammed al Asumi, a former adviser at the Dubai Executive Office and head of economic research at the state-run Emirates Industrial Bank.
But Asumi said such measures would not apply to sovereign wealth funds (SWFs) in the six-nation Gulf Cooperation Council (GCC) as an expected fall in the shares of many EU banks would inflict heavy losses on those SWFs.
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