GCC shielded world economy from ‘serious damage’: IMF head

Christine Lagarde, Managing Director of the International Monetary Fund (IMF), has issues a statement lauding the Gulf nations’ pragmatic oil stabilisation policies for safeguarding the global economy from falling into an inflationary spiral by helping stem the spike in oil prices.

“GCC countries’ oil policy has helped stabilise oil markets and counter price pressures that could have inflicted serious damage on the world economy,” Lagarde said in a media statement issued over the weekend.

The IMF issued the statement yesterday at the conclusion of a meeting in Riyadh, Saudi Arabia, with the finance ministers and central bank governors of the Gulf Cooperation Council (GCC).

She also hinted that the GCC model of cooperation was better suited to economic wellbeing of its member nations than perhaps the Euro Zone model.

“The GCC meetings are an important example of how countries can work together to address the challenges they are facing. Indeed, the GCC is fundamentally about cross-country economic cooperation,” she said, without mentioning the Euro Zone’s failure to address their ongoing economic concerns.

Lagarde also highlighted the positive growth that Gulf economies are enjoying despite being in a region fraught with challenges. “While prospects remain challenging for many countries throughout the Arab World, the GCC economies are enjoying high growth,” she noted.

The IMF chief noted that higher oil prices and an expansionary fiscal policy were leading the Gulf economies to enjoy sustainable grow. “The effects of the global downturn have so far been limited, oil prices remain near historically high levels, and higher export volumes have contributed to buoyant hydrocarbon revenue,” Lagarde said.

“With expansionary fiscal policies and low interest rates providing strong stimulus, the GCC’s 7.5 per cent output growth in 2011 was the highest since 2003, and growth is remaining strong in 2012,” she added. “Nevertheless, given the uncertain global outlook, continued emphasis on strengthening resilience, including in fiscal and
financial sectors, will be important alongside greater focus on the foundations for longer-term growth,” Lagarde cautioned.

“Employment and job-creation has taken centre stage in the global economy in recent years. For several GCC countries, job creation for nationals is a key priority. Growth alone will not be enough. Steps to strengthen education and training, better job placement services, and measures to improve the relative attractiveness to employees of private versus public sector employment will also be needed,” she said.

“I would like to stress the important, positive role the GCC countries play in the broader Middle East and North Africa region, and the world at large. The generous financial aid the GCC has provided to some of the Arab countries undergoing transition is helping those countries through a very difficult period. And, at the global level, GCC countries’ oil policy has helped stabilise oil markets and counter price pressures that could have inflicted serious damage on the world economy,” she concluded.

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