The world’s steepest deflation is set to linger across Gulf Arab states as the coronavirus pandemic broadens a slump in prices that started with a downturn in their housing markets.
Price declines in Qatar, Bahrain and the United Arab Emirates are currently the biggest among more than 80 countries tracked on Bloomberg’s Global Economy Watch. Oman, another of the six members of the Gulf Cooperation Council, isn’t far behind. Inflation has been positive in Kuwait and recently picked up in Saudi Arabia after it tripled its value-added tax.
Restrictions imposed to stop the virus have translated into record deflation from Qatar to the UAE as social-distancing rules, job losses and the departure of foreign workers crushed consumer demand. Adding to the drag from housing, a downswing in oil is another challenge for the region’s $1.6 trillion economy, putting it on course for what could be its worst recession on history.
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