Today is the 50th day of Russian attack on Ukraine. A lot has changed since February 24 when Russian troops breached Ukraine’s dominion. This war decimates the adage ‘A friend in need is a friend indeed’. Some allies remain neutral while others mull switching loyalty. Whatever their political and economic compulsions, the war’s impact on global trade and business continues.
US economic sanctions clamped on Russia further disrupt routine movement of commercial goods and consumables. These sanctions compel allies to buy their country’s commodities from other sources. Trade and business disruptions inflicted by the Ukraine War, US sanctions on Russia, new variants of coronavirus, and the spike in inflation combine to make world position grim.
Inflation is the rate of increase in prices over a particular period. Higher energy and food prices have spiked inflation in several developed economies. US leads the Consumer Price Index [CPI] rates this year with +8.5 per cent. Germany follows next with +7.5 per cent , United Kingdom +6.2 per cent, Canada +5.7 per cent, France +5.1per cent and South Korea +4.1per cent.
The GCC has kept inflationary trends under control. The Sultanate of Oman’s CPI decreased to 108.50 points in February from 109 points in January of 2022. The country’s inflation rate further decreased to 3.60 per cent in March from 4.02 per cent in February of 2022. It is the lowest reading in four months, according to the National Centre for Statistics and Information (NCSI) data.
The Sultanate of Oman’s Standard & Poor’s credit rating as on April 1, 2022 stands at BB- with stable outlook. Fitch’s credit rating as on December 20, 2021 was BB- with stable outlook while Moody’s was Ba3 with stable outlook, according to Trading Economics data.
Saudi Arabia bucked the GCC trend as its annual inflation rate increased to 1.6 per cent this February from 1.2 per cent in the previous months. It was the highest spike since last June, as food and drinks inflation speeded up to a five-month high of 2.4 per cent in February from 2 per cent in January. This happened mainly because of a 9.7 per cent surge in vegetable prices, according to Saudi Arabia Central Department of Statistics and Information.
Qatar’s annual inflation rate went up for the first time in three months to 4.42 per cent last month from 3.99 per cent in February, pointing to the highest level since last December, according to Qatar Statistics Authority.
Further north in the GCC, Kuwait’s annual inflation rate stood at 4.30 per cent this January, unchanged from December 2021, which was the highest level since October 2011, according to Kuwait Central Statistical Bureau. Consumer Price Index CPI in the United Arab Emirates increased to 108.62 points in December from 108.60 points in November of 2021. In Bahrain the rate increased to 3.20 per cent in February from 3.10 per cent in January, according to its Central Informatics Organisation.
Although data shows slight increase in most GCC states, a moderate amount of inflation in, particularly in Qatar and Saudi Arabia, is a sign of a healthy economy, because the demand for goods and services increases as the economy grows.
Food prices are important economic signs in the GCC. These countries import most of their consumer goods. Therefore, food security is a major policy decision for the GCC. Most have done well.
The Sultanate of Oman took steps to ensure its food security almost three years ago. Oman Food Investment Holding Company [OFIC] aims to develop the Sultanate of Oman as a regional hub for public consumables under its food security plan. The four keys of food security are — food availability, access to food, use and stability. Oman is doing well on this front.
[Sudeep Sonawane, an India-based journalist, has worked in five countries in the Middle East and Asia. Email: [[email protected]]
