Economy / United Arab Emirates
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Credit Crunch Gets Local: Key Implications
August 2008 | Market StrategySorry, you must be a subscriber to view this article in full. If you are a subscriber please login.
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We do not see the current liquidity crunch that is pervading the Gulf at the moment as particularly linked to the global cash crisis. More positively, it is the result of strong demand for financing by the rapidly growing private sector. However, with inflation remaining a key concern, the central bank is unlikely to intervene with cash injections or further rate cuts. Against this backdrop, we do not see any rapid correction in Gulf currency interest rates, and there could be downside risks to growth, and to stock markets. However, on the flip side, this is the monetary tightening governments