EFG Hermes: GCC Economic Update

GCC to Benefit From QE3: Oil Buoyed by Stimulus Hopes
EFG Hermes see the GCC region being an overall beneficiary of a possible third round
of Quantitative Easing (QE). The growing expectations of stimulus moves from
the US and other central banks have already provided support to the oil price,
despite weak demand fundamentals.

Fiscal Space for QE3 Disappointment
Any disappointment in the Federal Reserve’s announcements or actions over
the coming weeks compared to market expectations would put downward
pressure on the oil price.

Limited Risk to Inflation From Weaker USD
The USD has weakened against other major and emerging market currencies,
in line with the strengthening in the oil price, due to increased expectations
of further US monetary easing.

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