UAE, Gulf economies will be relatively insulated from any global recession

UAE, Gulf economies will be relatively insulated from any global recession

Dubai: Are the world’s leading economies heading for a synchronised slowdown that could either be a full-on recession or a long drawn out stagflation? If so, how will the UAE and other GCC economies fare? Analysts say while it is not easy to predict the accuracy of the severity, there would be no pockets of sanctuary including for the GCC. However, an economy like the UAE that has substantial external reserves, rising government revenues from high oil prices, and a banking sector abundant with liquidity, will find a recession to be less painful. The International Monetary Fund (IMF) loosely defines a recession as a period of decline in economic activity. Most analysts use, as a practical definition of recession, two consecutive quarters of decline in a country’s inflation-adjusted GDP. The IMF, the Institute of International Finance (IIF) and the World Bank have warned that the world is fast slipping into a slow growth period. “A global recession [this year] is not our core scenario, though we see a greater risk next year,” said Monica Malik, Chief Economist of Abu Dhabi Commercial Bank. “Risk of policy missteps are also high, alongside potential for geopolitical factors pushing up food and commodity prices