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Gulf banks have proved resilient, says IMF chief
The Gulf banks have "proven quite resilient to the recent financial turbulence, although equity markets have seen some decline", Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), said in a statement.
- By Saifur Rahman, Business Editor
- Published: 23:38 September 18, 2008
- Image Credit: Bloomberg News
- Strauss-Kahn at a news briefing on the IMF's semi-annual World Economic Outlook report in Washington, DC yesterday.
Dubai: The Gulf banks have "proven quite resilient to the recent financial turbulence, although equity markets have seen some decline", Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), said in a statement.
"The GCC banking and financial sectors have proven quite resilient to the recent financial turbulence, although equity markets have seen some decline," Strauss-Kahn said in a statement issued after a meeting with the finance ministers and central bank governors of the six-nation Gulf Cooperation Council (GCC) in Jeddah.
"Since the last GCC meeting, the difficulties in the US financial sector have adversely affected global growth prospects. The most recent developments should be seen in the context of a financial sector restructuring and consolidation. This is a necessary condition for restoring the sector's effectiveness.
"At the same time, the speed and scale of these events have added to short term uncertainties and further significant financial strains cannot be ruled out.
"We continue to anticipate a gradual global growth recovery in 2009, although the weekend's developments represent a potential added risk to the outlook."
He said, the IMF projects a decline in global growth of about 4 per cent in 2008, reflecting the slowdown in the United States, Europe, and Japan and some deceleration of growth in most emerging market and developing countries.
"Fuelled mainly by the jump in oil and food prices, inflation has risen to its highest levels in more than a decade in both developed and emerging countries," he said.
"Fiscal, monetary, and exchange rate policies must respond adequately and expeditiously to the increasing inflation risks. Failure to do so could undermine medium-term growth and poverty reduction efforts."
He also shed light on the Sovereign Wealth Funds (SWFs), seeking greater transparency of the operations of these funds.
"I welcome the stabilising role played by Sovereign Wealth Funds, including from this region, in providing long-term sources of capital. Fostering greater transparency of the operations of these funds along the lines of the voluntary principles proposed by the working group on Sovereign Wealth Funds will help support an open and stable international investment climate," he said.
He also commended the progress made by the six Gulf states in their quest to seek economic integration, however, warning that it would be difficult to meet the 2010 deadline.
"Progress in GCC economic integration has been commendable, including the launching of the common market this year, along with steps to prepare the institutional and operational foundations for a single currency," he said.
"Overcoming the current inflationary pressures, developing a clear vision of the powers of the future common central bank, choosing an exchange regime of the common currency, and harmonising financial regulations and structures will be critical in this process."
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