Growth prospects remain robust as Gulf Cooperation Council (GCC) embraces rate hikes

The GCC countries have entered a period of higher interest rates – their US$ currency pegs mean regional central banks mirror US Fed hikes. Our analysis reveals this might be a modest headwind for Bahrain, Oman and also Qatar, although Saudi Arabia will be cushioned by strong domestic deposit base to finance credit, low external debt and large FX reserves.

What you will learn:

• The rise in short-term rates will lift the cost of credit and reduce lending volumes to businesses and households, but the impact will probably only be felt in 2023.
• The ascent from historically low levels comes at an opportune time given high oil prices and improving financial positions, which underpin strong demand outlook in the near-term, but also against the backdrop of rising inflation.
• Oil market tailwinds will insulate regional assets in this volatile period.