RIYADH, (Asharq Al-Awsat and Agencies) – Gulf Arab policymakers will discuss a joint response to the global financial crisis at a meeting on Saturday, as a looming global recession threatens to put the brakes on a regional economic boom.
Finance ministers and central bank governors of the oil-producing Gulf Cooperation Council (GCC) are holding an emergency meeting in the Saudi capital, Riyadh, to look at ways of better coordinating policy responses to the crisis.
Saudi Arabia, the United Arab Emirates and four other Gulf states have so far adopted separate policy responses to ease the pressures of the global liquidity crunch on their banking sectors.
Saturday’s meeting will be a chance to call for more coordinated action among states that are preparing for monetary union, including a single currency, by a 2010 deadline that has been hobbled for years by obstacles.
“The meeting will discuss the necessary coordination and cooperation mechanisms to protect GCC economies from the repercussions of the global financial crisis,” GCC Secretary General Abdul-Rahman al-Attiyah told Asharq Al-Awsat.
The GCC also includes Qatar, Kuwait, Bahrain and Oman.
Looking to defrost interbank lending and boost confidence in their stock markets, Gulf central banks and governments have guaranteed bank deposits, eased lending restrictions, set up emergency funding facilities and invested money into ailing stocks.
Saudi Arabia’s stock market <.TASI> plunged more than 8 percent in early trading on Saturday, having dropped more than 44 percent this year.
The global turmoil has hit the Gulf region after six years of high oil prices allowed state and private investors to funnel billions of dollars into industry and infrastructure projects.
Banks are now struggling to finance these projects, leading economists and policymakers to expect project delays and cancellations.
Economic growth in the region is also expected to slow, as producer group OPEC cuts crude output to stem a sharp decline in oil prices, which have tumbled by more than half since hitting record levels above $147 a barrel in July.
OPEC agreed at a meeting on Friday to cut output by 1.5 million barrels a day, about 5 percent of its supply, from Nov. 1 — a move that failed to halt a slide in oil prices.