GCC forecasts high borrowings’ cost in near-future

18 Mar 2016

(MENAFN) GCC nations including the UAE, Saudi Arabia, Kuwait and Bahrain have increased interest rates by a noticeable 25 basis points following the recent Fed rate, according to the latest reports.

Additionally, the GCC central banks basically follow the Fed lead in interest rates in spite the severe deterioration in oil prices and anticipations of an underwhelming economic growth.

Analysts expect a visible rise in the cost of funding for the banks this year, while they’ll reflect this in their loans, meaning the cost of new loans to the regional firms will also continue to grow.

“Monetary conditions in the GCC are set to tighten on the back of external and domestic factors. Liquidity has tightened in 2015 as government deposits have dropped 21 percent y-o-y in Sep,” said an economist.

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