The economies of Gulf Cooperation Council (GCC) member states are unlikely to escape the effects of a slowdown in US economy, concluded a recent study conducted by the Emirates Industrial Bank (EIB). Nonetheless, the report asserts that the effect of the US slowdown will not be acute.
Countries most likely to be affected by a US slowdown would be those that have the United States as their major export destination. Indirect economic losses would be inflicted upon GCC countries that heavily rely on US corporations for foreign direct investments.
GCC members do not fall neatly into either of these two categories, the study stated, but their economies will be feeling the impact as a world economic slowdown led by a downturn in the United States could lead to slower oil demand growth.
The EIB study said 'the slowdown looks increasingly serious and one which, if it turns ugly, would have enormous ramifications for every other region of the world economy, including the economies of the GCC countries.“
Still, the EIB report is careful at this stage not to identify the US slowdown as a recession. The reduced growth rates and corporate retrenchments could either be a sign of an oncoming recession, it stated, or may just imply a market correction. The US economy is still robust, it made sure to clarify, with unemployment at only four percent.
The GCC constitutes the largest formal economic grouping in the region, embracing Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. — (Albawaba-MEBG)
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