Recent forecasts for the Gulf region suggest an enviable outlook, with GDP growth well into substantial recovery, inflation under control, and the overall financial balances of government budgets and balance of payments on current account in comfortable surplus. It’s a world away from the deficit-ridden countries of much of the developed world.
Much has changed locally since the parallel slumps in growth and inflation in 2009 among the GCC states, and legacy trends since then. Real GDP slid fairly precipitously around that time, while inflation simply fell off a cliff.
A few weeks ago this column wondered aloud how the future might be, considering that the basic monetary setting of interest rates would remain very accommodating, through the US dollar peg. The quoted analysts suggested that the needs of the US and the Gulf respectively were not so out of line right now, and that other counter-cyclical measures were available to the central bank to contain any recurrence of a surging uptrend.
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