IMF forecasts GCC inflation rise to 7%


Overall inflation in the oil-rich Gulf Cooperation Council is expected to increase to about seven per cent in 2008, the International Monetary Fund said on Monday.

"Overall inflationary pressures in 2008 are expected to increase to about seven percent on average," Gene Leon of the IMF's Middle East and Central Asia section told a forum in Bahrain.

The IMF had forecast overall inflation in the six GCC countries to be six per cent in 2007 while it had expected inflation in Qatar and the United Arab Emirates to ease around 12 per cent and eight per cent, respectively.

But in updated figures shown in Leon's presentation, inflation in Qatar has surged to around 14 per cent in 2007 while consumer prices in the UAE were estimated to have risen to around 11 per cent.

The IMF figures also showed inflation rising over 4.1 per cent in the traditionally low inflation economy of Saudi Arabia, which is the largest in the Middle East.

Inflation increased by around 5.5 per cent in Oman, over five per cent in Kuwait and was estimated to have increased by over four per cent in Bahrain, according to the IMF.

GCC members Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates have been enjoying a windfall of oil revenues on the back of record crude prices.

But the surge in revenues, which have injected GCC economies with a shot of energy reflected in impressive economic growth, has also left countries awash in cash. (AFP)