While oil inflation fears in emerging markets are warranted, these risks are being mitigated as Gulf oil-exporting states buy emerging market products and services as part of their fiscal spending spree.
Emerging economies are worried about oil and food inflation putting a spanner in the works, but the ‘Arab spring’ - a romantic term for the revolutions and evolutions taking place in many Middle East countries - means that many oil-exporting economies have opened their coffers to appease their citizens.
“Higher spending by Gulf governments could produce trade benefits for other emerging economies. It is worth assuming that higher levels of spending in the GCC will have considerable leakage into imports,” notes Citibank in its report on Emerging Markets Macro and Strategy Outlook. READ MORE
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Posted by blengas | March 31, 2011, 1:28 pm