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Survey of Economic and Social Developments in the Arab Region 2014-2015

image of Survey of Economic and Social Developments in the Arab Region 2014-2015
In addition to conflicts and related security disruptions in the Arab region, a significant fall in oil prices and their uncertain prospects have become a predominant economic concern, with prices plunging by more than 50 per cent in the second half of 2014. Nevertheless, member countries of the Gulf Cooperation Council (GCC) have continued to lead growth in the Arab region. This edition of the Survey of Economic and Social Developments in the Arab Region looks at the continued expansion of the non-oil sector as it maintains GCC economic growth. Lower oil prices have not yet negatively affected the GCC economically, although confidence has dropped with weakening stock markets and real estate transactions. Furthermore, lower oil prices have benefited oil-importing Arab countries by easing their balance-of-payment and fiscal constraints. With conflict and violence in the region, one of the main channels for economic stabilization has been intraregional flows of capital and remittances from the GCC countries.

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Global context and its implications for the Arab region

In 2014, the world economy witnessed several significant shifts. Monetary policy stances have revealed a split between the United States of America and other developed economies. Reflecting its robust economic recovery, United States monetary policy is scheduled to be normalized with a hike in interest rates by the end of 2015, but interest rates of other developed economies are expected to stay at their historic lows. This difference in interest rate prospects has caused a significant appreciation of the United States dollar against other major currencies, including the euro and the Japanese yen.

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