Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Weak dollar fails to worry GCC  Join our daily free Newsletter

MENAFN - Arab Times - 07/11/2010

No. of Ratings : 0
Add to Mixx!


(MENAFN - Arab Times) The weak US dollar is not a concern for Gulf economies and Kuwait is likely to increase spending in its budget for the next 2011/12 fiscal year, the OPEC countrys finance minister said on Saturday.

The dollars slide has caused concern among oil producers as it pushes down the value of their dollar-denominated oil revenues while the price of their commodity imports, such as grains, have been increasing.

However, when asked whether there was any concern about the impact of the weak dollar on Gulf Arab economies, Kuwait Finance Minister Mustapha al-Shamali said: No.

Inflation levels in the GCC are not worrying, Shamali was quoted as saying by KUNA, Kuwaits official news agency.
The dollar hit an 11-month low against a basket of currencies earlier this week.

Kuwait, unlike its fellow Gulf oil producers, abandoned its currency peg to the dollar in 2007 in favour of a currency basket to rein in then soaring inflation, which is on the rise again.

A weak dollar also tends to lift oil prices as money shifts from the currency market to commodities in search of better returns.

John Sfakianakis, chief economist at Banque Saudi Fransik, said a weak dollar would have some impact on inflation across the Gulf region but did not see any change in Gulf countries currency regimes.

There is plenty of evidence today that the Gulf economies as a whole will neither consider de-valuing or depegging from the dollar as it is neither prudent nor serves an economic purpose, Sfakianakis said.

However a further weakening of the dollar will have some inflationary pass-through impact, he added.

Price pressures are highest in Saudi Arabia and Kuwait with inflation above 5 percent, whereas in the rest of the Gulf Arab region inflation is more benign.

Shamali also told reporters on the sidelines of a meeting of Gulf finance ministers and central bank governors in Kuwait that the Kuwait governments expenditure would rise in the next fiscal years budget.
There is some increase in the budget but we are discussing it, he said.

The worlds fourth-largest oil exporter ramped up spending by more than 34 percent in its current budget for 2010/11, which began in April, partly to diversify its oil-reliant economy and increase the role of the private sector.

The OPEC members 2010/11 budget forecasts a deficit of 6.58 billion dinars or nearly 21 percent of gross domestic product, assuming oil, the key revenue earner, would fetch 43 a barrel.

Benchmark US crude ended at 86.85 a barrel on Friday.

Analysts say Kuwait is set to post the biggest surplus in the Gulf of 18.9 percent of GDP in 2010/11 because its oil price estimate is well below market prices.

Kuwaits budget surplus rose to 5.43 billion dinars in the first six months of the fiscal year ending next March.

A sustained high rate of inflation in some Gulf Cooperation Council states might force a halt fiscal stimulus as early as 2011, a senior International Monetary Fund official warned on Saturday.

Comfortable fiscal and external positions permit most GCC countries to maintain fiscal stimulus in 2010 and into 2011 if necessary, John Lipsky, IMF first deputy managing director, said in a statement.

However, in some countries we are seeing early signs of a pickup in inflation. If sustained, this may call for a withdrawal of stimulus as early as 2011, Lipsky said after a meeting with GCC finance ministers and central bank governors.

Lipsky said the outlook for GCC countries has improved considerably thanks to the ongoing global recovery and the stabilisation in oil prices.

Inflation in five of the GCCs six states soared to double-digit figures before the global financial crisis, but then eased. Qatar, for example, posted inflation of 15 percent before the crisis and deflation during it.

But in recent months, prices have begun to rise again, with Saudi Arabia hitting an inflation rate of more than five percent and Kuwait recording the highest inflation rate in 18 months in September at 5.3 percent.

The GCC states, which import almost everything, have blamed rising food prices for the current surge in inflation.

In its quarterly regional outlook released two weeks ago, the IMF urged the oil-rich Gulf states to raise spending in 2011 and maintain expansionary fiscal policy.

Several GCC countries were able to implement a financial stimulus in the wake of the global financial crisis that alleviated its effect on their economies.

Lipsky also said short-term challenges facing the GCC states will be to support a revival in credit growth, which decreased sharply with the global downturn.

The IMF official also told reporters that relative stability in energy prices had a positive impact on the GCC economies and their recovery.

We have seen a rebound in growth in the non-oil sector of the regions economy, and we think that is going to continue in 2011, he said.

Oil prices
The International Monetary Fund does not see a rise in oil prices as a threat to the global economic recovery and will closely monitor a new round of US policy easing, a senior IMF official said on Saturday. No, it seems that in the current environment the energy prices seem to be responding to strengthening growth certainly relatively close to a range that has appeared consistent with continued expansion in the global economy Lipsky told reporters.

Benchmark US crude touched a two-year peak of 87.43 a barrel on Friday after stronger-than-expected US jobs data.

Asked about the US Federal Reserves decision this week to expand monetary easing with a commitment to buy 600 billion in government debt to try and bolster a faltering US recovery, Lipsky said: We will be watching closely to see the impact of this development.

The IMFs chief economist Olivier Blanchard said on Thursday that the Feds economic stimulus would intensify capital flows into emerging markets, which could be destabilising.

The US central banks decision has drawn criticism from a number of nations who say it is generating global instability by ramping up their currencies against the dollar, potentially inflating asset bubbles and stoking inflation in their economies.

The six Gulf Cooperation Council states have moved closer to fully implement their much-delayed customs union and only administrative hurdles remain, Gulf officials said on Saturday.

There is consensus over the customs union and even there is a unified GCC law on customs, GCC assistant secretary general for economic affairs Mahammed al-Mazroui told reporters at the end of a GCC finance ministers meeting.

But there are some hurdles which the ministers have studied ... These are only administrative difficulties relating to movement of goods between the GCC member states, Mazroui said.

As long as there is integration and joint work, there will be some hurdles and efforts will be exerted to sort them out, he said.

The GCC official told the opening session that achieving economic integration requires all concerned committees to accelerate performance and remove the remaining obstacles to the customs union and common market.

In September, the energy-rich bloc decided to postpone implementation of the customs union in the face of disagreement over the sharing of tariff revenues and problems meeting World Trade Organisation (WTO) rules.

But the council agreed on establishing an electronic clearing mechanism for settling customs duties between the GCC states - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

Kuwaits Finance Minister Mustafa al-Shamali told reporters after the meeting that his GCC counterparts had agreed to implement the electronic system, and he played down the remaining obstacles to a customs union.

The customs union was launched at the start of 2003 for a three-year transition period. But issues of revenues, dumping and protectionism repeatedly have delayed its full implementation.

Mazroui said the GCC states have tasked the customs union committee with reviewing the unions mechanisms every year for the next five years.

The customs unions final aim is to create a free trade zone to facilitate the movement of goods among the GCC states and between the Gulf and the outside world.

Shamali said the ministers also discussed a Bahraini proposal to set up a pan-GCC fund for financial and economic stability. Manama has been asked to submit a detailed working paper on the issue at the next meeting.

They reviewed a Qatari proposal to establish a development bank, while Mazroui said the ministers had approved amendments to a unified anti-dumping law to fall in line with WTO requirements.

The ministers and GCC central bank governors were scheduled later on Saturday to meet with a senior International Monetary Fund official.


  MENA News Headlines
Apr 23 2014Omantel launches service package for youth ,MENAFN
(MENAFN) Omantel announced launching 'Ozone' plan, a new package designed especially for the youth. This comes with the company"s constant efforts to enhance the communication needs of its customers, ...

Apr 23 2014Dh154 billion for Arabtec projects ,Khaleej Times
(MENAFN - Khaleej Times) Arabtec will spend dh140 billion on building one million low-cost houses in egypt and dh14 billion on five mixed-use residential projects in abu dhabi and dubai its chief ...

Apr 23 2014?Titli? makers excited about Cannes selection ,Khaleej Times
(MENAFN - Khaleej Times) The movie about the badlands of delhi?s dystopic underbelly will be in competition as part of the un certain regard section of the 67th cannes film gala to be held may ...

Apr 23 2014Saudi- Yaroub Bashraheel: In search of peace ... underwater ,Arab News
(MENAFN - Arab News) You've heard of diving snorkeling and other water activities but rarely has anyone heard of free-diving. it's a form of diving underwater without the aid of any breathing ...

Apr 23 2014Saudi- Schneider highlights intelligent health care solutions at forum ,Arab News
(MENAFN - Arab News) Schneider electric a global specialist in energy management is set to showcase its leadership in intelligent health care solutions at the second saudi forum for planning and ...

Apr 23 2014Saudi- Divorcees can seek housing ,Arab News
(MENAFN - Arab News) The kingdom will accept applications from saudi divorced women and widows for financial and housing support said justice minister muhammad al-issa.al-issa called on applicants ...

Apr 23 2014Saudi Savola Group revenue up 43 pct in Q1 ,MENAFN
(MENAFN) Saudi Arabia's Savola Group registered a 43 percent increase in profits in the first quarter, well over expectations of analysts, Arabian Business reported. According to a statement to ...

Apr 23 2014Dewa and GE explore collaboration opportunities ,Khaleej Times
(MENAFN - Khaleej Times) Saeed mohammed al tayer managing director and chief executive officer of the dubai electricity and water authority (dewa) recently received a ge delegation to explore ...

Apr 23 2014Sale of Gate Towers penthouses launched ,Khaleej Times
(MENAFN - Khaleej Times) Aldar properties has launched the sale of 21 exclusive duplex penthouse apartments at gate towers the penthouse collection in shams abu dhabi on al reem island. one of ...

Apr 23 2014Tamouh steps up activity on projects ,Khaleej Times
(MENAFN - Khaleej Times) Abu dhabi-based real-estate developer tamouh has scaled up construction activity on all of its announced reem island projects to meet the rising demand for prime spaces in ...

Apr 23 2014Here?s your chance to share screen space with SRK ,Khaleej Times
(MENAFN - Khaleej Times) Groupon india has joined hands with srk?s red chillies entertainment to give fans a chance to feature with the superstar in his upcoming film ?happy new year?. if you ...

Apr 23 2014Local international companies come out in force ,Khaleej Times
(MENAFN - Khaleej Times) Cityscape abu dhabi has started showing stronger interest from property developers who have showcased their upcoming projects. the three-day realty show was opened by ...

Apr 23 2014Saudi- New passport office opens at Red Sea Mall ,Arab News
(MENAFN - Arab News) The passport department has opened a new office for citizens and residents at the red sea mall.gen. abdul rahman bin abdullah al-tuwairki deputy director general of the ...

Apr 23 2014Saudi- Noha Al-Sharif — an expert in Islamic sculpture ,Arab News
(MENAFN - Arab News) Saudi sculptress noha al-sharif is known for her islamic inspired sculptures that reflect both religion and lifestyle. the concept of modern art attracted her to this medium ...

Apr 23 2014Kowait- Police deportation powers curbed ,Arab Times
(MENAFN - Arab Times) Kuwait city april 3 (afp): kuwaiti police will no longer be able to deport expatriates without interior ministry approval under new rules published thursday after officers ...

Apr 23 2014Saudi- ASUS showcases product series at Aramco Week ,Arab News
(MENAFN - Arab News) Asus described as the world's renowned consumer notebook vendor and producer of the 'world's best-selling motherboards" recently participated in aramco week and showcased a ...

Apr 23 2014Kowait- Amiri Diwan urges all off tape case ,Arab Times
(MENAFN - Arab Times)  kuwait city april 9 (agencies): the amiri diwan has called on everybody to steer clear of the controversial tape issue and let the public prosecution take the necessary ...

Apr 23 2014ADCB profit grows 26% in first quarter ,Khaleej Times
(MENAFN - Khaleej Times) Abu dhabi commercial bank?s profit grew 26 per cent in the first quarter of the year to dh1. however net profit rose 22 per cent year-on-year. non-interest income was 24 ...

Apr 23 2014'Piles and piles' of bodies in S. Sudan ,Arab News
(MENAFN - Arab News) Nairobi: gunmen who targeted both children and the elderly left 'piles and piles" of bodies — many of those in a mosque — in a provincial capital in south sudan the un's top ...

Apr 23 2014Kowait- New hospital to be ready by 2014 end ,Arab Times
(MENAFN - Arab Times) Kuwait city jan 14 (kuna): director of the 'mega projects 3' group at kuwait oil company (koc) yaqoub dashti said on tuesday that the new ahmadi hospital would be ready to ...





Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  

Middle East North Africa - Financial Network

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details


Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks

Saudi Arabia 

Investment Game
Economic Calendar
Financial Glossary

Portfolio Tracker


Financial Calculators

RSS Feeds [XML]

Corporate Monitor


Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters

© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help