Oil boom creates challenges for region - Middle East

Dubai: Managing the windfall oil revenues of the last years is a continuing challenge for oil exporters, a World Bank report says.
"The risk of overheating domestic demand and its potential inflationary consequences loom as an overarching threat," the bank's Global Development Finance 2007 report, released yesterday and obtained by Gulf News, says.
"It appears, however, that in contrast with earlier episodes of oil booms, judicious use of oil stabilisation funds and other financial management approaches have served to counter overheating and to augment the non-oil supply potential of the economy. Continued pursuit of these approaches should remain a priority."
');
//-->
The emergence of large-scale capital flows within the broader region, largely among the GCC and from GCC to the resource-poor economies in the region, offers new opportunities as well as risks, it says. "The 2005-06 crash of GCC equity markets serves as a reminder of the potential of overshooting in a new financial environment."