Friday, 6 June 2008

Middle East sees resurgent inflation and associated growth risks

The Middle East region has started to see inflation due to its largely fixed or heavily managed exchange rates, an oil-fuelled liquidity expansion, widespread infrastructure bottlenecks and a reliance in most countries on food imports. In 2007, the avergage rate of inflation was 10.4%. Looks like it is going to even higher this year.

Moody's Investors Service, interestingly, has just brought out a report that says "even the ratings of affluent, oil-exporting sovereigns could be affected over the longer term if high price growth persists.”

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