By IANS,
Dubai : The Gulf is losing its attraction for expatriate workers because of the rising cost of living, according to a report from Moody’s Investors Service.
The report said that though the governments in the region were trying to cushion the effects of sky-rocketing inflation on their citizens through price controls on basic commodities, rent caps and salary hikes, such action was making the governments rely more and more on their oil budgets, the Arab News reported citing Moody’s.
This would create problems for the Gulf Cooperation Council (GCC) countries to adjust to future downturn in oil prices.
The GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
With expatriates keeping away, the attempts of these governments to create non-oil based economies would also be undermined.
Of the large number of expatriates, the majority are from the Indian subcontinent.
Of all regional groupings of the International Monetary Fund (IMF), the Middle East experienced the highest average inflation rate in 2007, at 10.4 percent and this is expected to accelerate in 2008, according to the report.
“Although inflation is seldom a direct driver of Moody’s ratings, it can affect ratings indirectly through three main channels – fiscal, political and economic. We are beginning to observe these in the Middle East,” Moody’s was quoted as stating in the report.