The International Monetary Fund (IMF) released a report update that urges the Gulf Co-operation Council (GCC) to begin exit strategy preparations. According to the report the high levels of spending GCC member states are involved in need to be abandoned, but not until conditions of the economy indicate it is the right time to do so.
Forecasted growth for the non-oil sectors in the GCC rose from the 4.0 per cent reported in May to 4.3 per cent in the recent IMF revision.
The GCC states included in this report are Saudi Arabia, the UAE, Oman, Kuwait, Qatar and Bahrain.
Current economic developments in Dubai and Greece are expected to maintain their current level of limited effect on the GCC area, said the IMF report. Also the IMF pointed out that there are sizable and accessible foreign assets to help buffer any new shock impacts.
Although the economy is growing strongly in the GCC region, the IMF noted that continually lower oil prices pose a major risk for that growth.
Across the Atlantic crude oil futures in the US have risen for three consecutive days as of Wednesday. These rises are due to an optimistic outlook on the economy as seen in the strengthening of equity markets.
The IMF encouraged the GCC members by stating that although current challenges related to the financial sectors might dampen short term growth those issues are being managed and will have little effect on long term prospects.
The report also said that capital adequacy ratios for the region’s banks continue to be strong and that all indications point to strengthened profits.
It also stated that according to analysis by the IMF, the GCC non-financial corporations had sufficient abilities to manage their debts at the close of 2009.
The report noted that the current crisis over debt in Greece was stirring up further doubts about the recovery of global economy. Oil prices had become increasingly volatile and fell due to that uncertainty.Paul Holdsworth, Staff Writer, Gulf Jobs Market News