Another Boom And Bust? Assessing Inflation Risks In The GCC

Inflation is the major question mark hanging over the Gulf Cooperation Council (GCC)'s otherwise robust medium-term macroeconomic outlook. Given rapid economic growth, rising incomes, and loose monetary and fiscal policy, there is a significant risk that upside pressure on prices could pick up sharply in the years ahead. Higher inflation would dilute the real impact of the GCC's oil wealth, damage the region's international competitiveness, raise questions about the sustainability of currency pegs, and increase the risk of another 2008-style 'boom and bust'.

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