No 'lid' in sight
In this column and on our program we are busy exploring the efforts by Middle Eastern governments and businessmen to build a sustainable model for economic growth. It has been quite fashionable to talk about building the “software” or the people skills to leverage the “hardware” that is being constructed throughout the region.
Unfortunately, as governments are finding out now, it is not so easy. I have an image of my children erecting a Lego set in their playroom. They put the pieces together, somewhat unevenly, with many different colors. If they don’t like what was pieced together, they simply tear it down and start all over again. The leaders in this hyper belt of economic growth are realizing that on the front lines that it is not that simple.
When one looks at the headlines,
During an interview this week Daniel Hanna, a visiting fellow at Chatham House (home of the Royal Institute of International Affairs) in
Secondly, Gulf central bankers have lowered interest rates in lock step with the U.S. Federal Reserve to match economic policies due to the dollar link. The problem is, the
In central bank parlance, policymakers talk about “calibrating” economies to keep growth moving forward, while keeping a lid on prices. This is not the time for calibration in the region. Outside of revaluing their currencies against the dollar or moving to a basket of currencies to buffer the dollar’s fall these banks, according to Hanna, have not developed other tools to tackle modern day challenges. With the exception to
This all sounds esoteric -- if you will -- but don’t say that to the flood of expatriate workers from
The pressure will mount in the months ahead and governments will use short term measures to cope.
The problem, as Hanna notes, is that “you may be storing up problems for the future”. While $100 plus oil is lifting the boat for all at this moment in time, if the global economic slowdown reaches the
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ABOUT THIS BLOGJohn Defterios’ blog accompanies the weekly business program, Marketplace Middle East (MME) that is dedicated to the latest financial news from the Middle East. As MME anchor, John Defterios talks to the people in the know, finding out their opinions on the big business moves in the region, he provides his views via this weekly blog. We hope you will join the discussion around the issues raised.
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