The Macroeconomics of the Arab States of the Gulf

Raphael A. Espinoza, Ghada Fayad, and Prasad Ananthakrishnan

Includes a Foreword by Christine Lagarde
A key resource for the data and theories applicable to the Gulf Cooperation Council (GCC) region
Analyses the structure of the economy and the special role that oil revenues, migrants, and the government play in the region
Takes into account the lessons of the global financial crisis

The Macroeconomics of the Arab States of the Gulf

Raphael A. Espinoza, Ghada Fayad, and Prasad Ananthakrishnan

Description

The economies of the Arab states of the Gulf have gone through considerable changes in the last decade, spurred by high oil prices and ambitious diversification plans. Large-scale immigration provided the labour force while capital inflows and financial development leveraged oil wealth to finance diversification. The collapse in real estate prices around the world followed by the global crisis slowed growth and raised questions on the appropriateness of what has been dubbed the 'GCC model'.

The Gulf Cooperation Council (GCC) countries have thus far managed to leverage their large natural resource wealth to achieve economic prosperity and finance social advances, and the region also emerged as an important source of funds for the other countries in the Middle East. Nevertheless, the GCC face several challenges. Productivity growth must increase to fully reap the benefits of investment. Jobs must be created for the nationals and the growing youth population. State intervention (which is prevalent, given that oil revenues accrue to the government) must become efficient and be used to diversify and modernize the economy. In addition, the recent crisis highlighted the importance of fiscal, monetary, and financial stability policies to manage macroeconomic cycles. This book analyses these issues and combines data and econometric analysis with theoretical discussions. It concludes with a discussion of the importance of the GCC for the wider region.

The Macroeconomics of the Arab States of the Gulf

Raphael A. Espinoza, Ghada Fayad, and Prasad Ananthakrishnan

Foreword, Christine Lagarde
1. Introduction
2. The Determinants of Long-Term Growth in the GCC Countries
3. Macroeconomic Impact of Migration
4. Government Spending, Subsidies, and Economic Efficiency
5. Fiscal Policy for Macroeconomic Stability
6. Monetary Policy with a Fixed Exchange Rate Regime
7. Non-Performing Loans and Financial Stability
8. Financial Markets in the GCC Countries
9. A Conclusion on the Importance of the GCC for the Wider Region

The Macroeconomics of the Arab States of the Gulf

Raphael A. Espinoza, Ghada Fayad, and Prasad Ananthakrishnan

Author Information

Raphael A. Espinoza, Economist, Research Department, International Monetary Fund,Ghada Fayad, Economist, Middle East and Central Asia Department, International Monetary Fund,Prasad Ananthakrishnan, Senior Economist, Middle East and Central Asia Department, International Monetary Fund

Raphael Espinoza is an Economist in the Research Department at the IMF and an External Research Associate at the Oxford Centre for the Analysis of Resource Rich Economies (OxCarre), University of Oxford. He has written on development macroeconomics, the economics of resource-rich countries, and asset pricing, and has worked on Qatar, Saudi Arabia, and the U.A.E. at the IMF. He is an Ingenieur des Ponts et Chaussees and holds a PhD in Economics from the University of Oxford.

Ghada Fayad is an Economist at the Middle East and Central Asia department at the IMF and an External Research Associate at the Oxford Centre for the Analysis of Resource Rich Economies (OxCarre), University of Oxford. Her research focus is on development macroeconomics, and she has worked on Qatar and Saudi Arabia in her country assignments at the IMF. She previously worked as a Research Fellow at OxCarre, and at the United Nations Economic and Social Commission for Western Asia. She holds a PhD in economics from the University of Oxford.

Prasad Ananthakrishnan is presently the mission chief for Qatar in the Middle East and Central Asia Department at the IMF and has worked on all the GCC countries. Prior to this, he was an Advisor to Executive Director at the IMF Executive Board, representing India, Bangladesh, Bhutan, and Sri Lanka. He has previously worked in the Reserve Bank of India on issues related to monetary policy, exchange rate management, and financial sector and debt management issues. His research focus is on international macroeconomics and financial markets. He holds a PhD in International Banking and Finance from the University of Bombay, a Masters in Commerce from the University of Bombay, and an MBA in Finance from the University of Pittsburgh.