DAVOS, Switzerland, (Reuters) – Saudi Arabia is not in recession and the central bank will do what is necessary for the domestic economy, the governor of the central bank said on Wednesday, adding he thought oil prices were already very low.

Speaking at the annual meeting of the World Economic Forum, Hamad Saud Al-Sayyari told Reuters: “We always do what is possible, what is necessary, for the local economy. The U.S. (cost of borrowing) is already at zero. We are not. We will follow the domestic developments. We are not in a recession.”

“I’m not concerned about the interbank market at all. The budget is already (planned) to have a deficit because of oil. (The oil price) is already very low and we have to be prepared for any development, but this year seems to be a difficult or challenging year for the global economy.”

Oil prices have fallen more than $100 a barrel since hitting a record high in July.

The slump in oil prices is dimming economic growth prospects in many Gulf States, including Saudi Arabia, and tight credit markets globally are discouraging corporate borrowing.

Some economists’ economic growth forecasts for Saudi Arabia have been slashed to almost zero for this year.

Saudi Arabia, like other oil-exporting Gulf states, pegs its currency to the U.S. dollar, but has kept interest rates above Federal Reserve rates, which stand at near zero.

In a move that bridges this gap, the Saudi Arabian Monetary Agency (SAMA) earlier this month reduced its benchmark repurchase rate for the fifth time since October to 2 percent from 2.5 percent, while reducing a rate that guides deposits by half to 0.75 percent.