The GCC economies, which had flourished thanks to economic expansion and hiking oil revenues, are likely to face deflation in case of continued slump in oil prices or global credit, it predicted.
The Gulf nations are required to move from an example marked by inflationary economic growth to one characterized by sustainable growth starting from combating inflation completely, it requested.
The GCC should thrash out methods that may enable its governments to rein in inflation; including monetary and financial policies, exchange rates and intervention in trade.
This will lead to an all-out framework of anti-inflation policies in the interest of macroeconomic stability, it said.
Saudi Arabia, Oman and the United Arab Emirates (UAE) have borne the brunt of Gulf inflation rates.
The recent economic study ascribed high inflation rates in developing countries to economic expansion, suddenly rising oil revenues, capital flow and growing demand for input.
However, the GCC member countries’ gross domestic product (GDP) have exceeded seven percent over the last couple of years.
GCC policy-makers are required to find ways to stimulate and spur more investment in such export-oriented productive sectors as industry, tourism, financial services, medical care and education, it advised.
To maintain macroeconomic stability, they should boost inflation monitoring capabilities through adopting and updating methods for gauging, forecasting and analyzing and stabilizing prices, it added.
