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.”