Asa Fitch
Gulf oil exporters with big trade surpluses will escape major scrutiny as leading economies move to identify nations they suspect of throwing the global financial system off balance.
The Group of 20 (G20) leading and emerging economies agreed late on Friday to stress-test member states as part of a long-running push to identify policies that caused imbalances in the hope of preventing a repeat of the financial crisis.
All member countries - Saudi Arabia is the only one in the Gulf - are to undergo four tests that try to identify economic imbalances.
The IMF is also to make a closer review of seven countries - the US, China, France, Britain, Germany, Japan and India - officials said, looking at debt, budget deficits and trade balances.
Paul Gamble, an economist at Jadwa Investment in Saudi Arabia, said while Gulf countries were running large budget surpluses as oil prices hovered above US$100 a barrel, they were unlikely to be singled out in the rebalancing efforts. For the most part, Mr Gamble said, Gulf oil producers were spending large amounts of their surpluses on vast social infrastructure and funnelling back oil revenues to energy consumers in the form of imports.
"The Gulf countries are large-surplus countries but equally I think they are doing their bit for rebalancing," Mr Gamble said. "To do more would be potentially reckless."
Saudi Arabia has announced $130 billion (Dh477.5bn) in spending to raise wages, build infrastructure and hundreds of thousands of new houses.
Other countries in the region, including Kuwait and Qatar, have announced their own long-term spending plans recently.
John Sfakianakis, the chief economist at Banque Saudi Fransi, said Gulf countries had a role to play in the rebalancing act but argued the region was helping to restore order rather than exaggerating imbalances.
"If anything, the Gulf countries have been contributing by supporting the financial system by buying assets and depositing large amounts of money in countries that have been facing imbalances, especially the US," Mr Sfakianakis said.
But high crude prices have emerged as a key concern for oil-importing countries as they try to right the system and strengthen a fragile recovery.
The worry is that consumer demand and industrial production could suffer if prices stay at elevated levels for long periods.
"The rise of the oil price in particular is taking place at an earlier stage of the recovery than it used to be," said Nout Wellink, a European Central Bank governing council member.
Today's oil prices are already having an effect on the global economy, Mr Gamble said, but they were not yet high enough to endanger the recovery.
"At the margins it's having an impact but at the moment it's not that great," he said.
"If prices went a lot higher, up to $170 or $180 [a barrel] and stayed there for six months, that would have a very clear impact on the recovery that would cause big problems in the global economy."
Keeping risks in check, b9
