GCC 'unaffected by Europe debt crisis'
Frankfurt, November 19, 2011
Gulf states should be largely unaffected by the euro zone debt crisis as their banks have minimal exposure to the bloc's debt, the head of Oman's central bank said, though he warned that they would not be immune to a broader global slowdown.
'Investments in European bonds by GCC banks are not so high,' Oman Central Bank executive president Hamood Sangour Al Zadjali said on the sidelines of a banking conference in Frankfurt.
'The impact (of euro zone problems) is not going to be great. However, our economies are dependent on oil; if there were to be any major slowdown in Europe and other parts of the world that would mean the impact on the oil price could affect us.
'But oil prices have been keeping at a reasonable level so that makes us happy.'
While the outlook for the global economy has clouded following the intensification of the euro crisis, oil prices have shown no sign of dropping to the psychologically significant $100-a-barrel mark.
For oil exporting countries like Oman, high oil prices strengthen national finances. Non-Opec producer Oman depends on crude for 69 per cent of its budget revenue and the hydrocarbon sector accounts for 46 per cent of economic output.
'We are preparing the budget for next year and there we have assumed that the oil price will be $75. But we think that is conservative pricing and we hope the real prices will be hovering around $100,' Zadjali said.
Oman's recent growth and inflation forecasts also looked robust despite the rise in Europe's woes, he added.
'The forecast for growth for this year and next is 5 per cent and inflation is around 4 per cent,' he said, adding he did not foresee any revisions to those figures.-Reuters