MUSCAT: The inflation rate in the Gulf Cooperation Council (GCC) states is much lower than in advanced economies such as the United States and Britain, according to a recent report published by the Arab Gulf States Institute in Washington.
The consumer prices in the Gulf have risen at a much lower rate than in the UK and the US, largely due to the peculiarities of the GCC economies, especially their status as energy exporters rather than importers, and the abundance of migrant workers in their labour markets.
Moreover, having a fixed exchange rate with the US dollar in five of the six GCC countries – Sultanate of Oman, Saudi Arabia, Qatar and the United Arab Emirates (and semi-peg in the case of Kuwait) – coupled with the absence of political stability means that monetary policy in the GCC tends to be more technocratic than in countries like the United States.
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Notably, given the fixed exchange rate between the currencies of the GCC and the US dollar, consumer price inflation in the six countries was generally expected to move on a large scale along with US inflation. Thus, the emergence of the difference between the US and the GCC is surprising and deserves further analysis, the report said.
