Arabian Gulf economies are well placed to weather the fallout from an American financial crisis if US authorities yet again face the same impasse that threatened global financial markets this week, a leading analyst says.
"Gulf balance sheets are by far the strongest in the emerging world. Most countries run healthy fiscal and current account surpluses, while at the same time debt is low," said Jason Tuvey, an economist at London-based Capital Economics.
"What's more, policymakers have ample resources available to soak up any economic spillover from a US default.
"Gulf countries have built up substantial amounts of wealth in their sovereign wealth funds [SWF] over the past decade or so.
"SWF assets are equivalent to over 200 per cent of GDP in Kuwait and the UAE."
However, Mr Tuvey said Gulf economies could be affected in three ways if a repeat of the United States crisis occurred.
"First, the value of SWF assets is vulnerable to the wider market fallout. A large amount of US Treasury bonds are held by SWFs, the value of which could fall in the event of a fallout," he said.
Second, loose monetary conditions in the US, to which many Gulf economies are tied via links to the dollar, could lead to an increased rate of credit growth in the region, possibly exacerbating fears of an asset bubble, especially in property markets, Mr Tuvey said.
Third, a period of economic recession that could follow a US default would be likely to affect oil prices, on which regional budgets are based.
"The upshot is that it would require a substantial US default and serious market dislocation for there to be a major adverse economic impact on the Gulf economies," he said. "And even then, they are probably the best placed in the emerging world to withstand the fallout."
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Starring: John David Washington; Adam Driver
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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Company profile
Name: Tratok Portal
Founded: 2017
Based: UAE
Sector: Travel & tourism
Size: 36 employees
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He has officiated weddings of Sikhs and people of different faiths from Malaysia, Sri Lanka, Russia, the US and Canada
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Plays golf once a week
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Completed a Bachelor of Commerce degree in Loyola College, Chennai, India
2019 is a milestone because he completes 50 years in business
Origin
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Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5