Inflationary pressures in Gulf countries have drop-ped substantially, but not disappeared completely and policymakers need to focus on financial stability, the head of Kuwait's Central Bank said yesterday.
The global downturn slashed consumer price growth across the world's top oil-exporting region from 2008 record peaks with some countries such as the UAE and Qatar experiencing deflation last year.
"Inflationary pressure in the GCC has fallen remarkably, but this does not mean at all a complete disappearance of this pressure," Kuwait Central Bank Governor Sheikh Salem Abdul-Aziz Al Sabah told the opening of a GCC central bankers meeting in Kuwait.
Price pressures are seen rising again this year as Gulf economies recover, but inflation is expected to stay in low single digits across the region.
Sheikh Salem also told policymakers from the six-nation GCC that central banks now need to focus most attention on issues related to financial stability.
"Accomplishing this task is not an easy one. It involves many challenges related to practical implementation," he said without giving details.
Debt restructuring of Saudi family businesses hit banks in the Gulf with slow credit growth seen as the main drag on the region's economic performance this year.