A new financial crisis is expected to hit Gulf economies due to problems facing the US, according to Bahraini bankers.

The crisis will not spare any Gulf country, including those where oil represents 90 per cent of the gross domestic product (GDP) like Saudi Arabia, or countries enjoying various sources of income and where oil accounts for less than 25 per cent of their GDP like Bahrain, they said.

The new crisis will result in economic stagnation in the Gulf, they said, adding that between 70 per cent to 90 per cent of GCC countries' financial reserves are in US dollars.

The US adopted monetary policies after the lowering of its credit rating that will maintain fixed interest rates, which will cause its economy to witness an unprecedented rise in inflation, thus affecting all countries with currencies pegged to the US dollar, in addition to all Gulf purchases in the currency, Credit Agricole Middle East managing director Elyes Al Qasseer told our sister paper Akhbar Al Khaleej. – TradeArabia News Service