Blitz Bureau
US President Donald Trump’s policies, which have rocked the financial and commodities markets globally, will have an indirect impact on the UAE, GCC and wider Middle East and North Africa (Mena) region, reported Khaleej Times quoting analysts.
However, some analysts said if the US applies tariffs on energy products from Canada and Mexico, than oilexporting GCC countries could see a boost in oil demand.
Global ratings agency S&P analysts said the UAE and other Gulf countries will be affected indirectly through higher interest rates as the US Federal Reserve will hike rates because Trump’s policies are likely to increase inflation in the world’s biggest economy.
In addition, UAE dirham and other Gulf currencies are also likely to strengthen further due to the US dollar getting stronger on the back of Trump’s trade policies, it said.
However, it cautioned that high interest rates could stifle growth and stronger currencies will impact the competitiveness of local productions, leading to lower GDP growth.
Trump earlier this week ordered tariffs on goods from Mexico, Canada and China. He later froze tariffs against Mexico and China but went ahead with tariff imposition on China. On February 5, China formally launched a dispute at the World Trade Organisation (WTO) over 10 per cent tariffs imposed by the US on Chinese goods.
Hassan Fawaz, chairman and founder of GivTrade, said Trump’s tariff policies could introduce challenges but could also have positive implications for the GCC region. “Trump’s protectionist policies may contribute to the acceleration of deglobalisation trends, potentially leading to economic instability, but also providing opportunities for the GCC to establish strategic partnerships and diversify its trade relationships in a more fragmented global market,” he said.
However, he added that the Gulf region will face challenges arising from the broader economic effects of Trump’s tariff policies. “Increased global tariffs could contribute to market volatility, particularly in commodities such as crude oil, which are vital to the GCC economies. In this regard, weaker global economic growth could affect demand levels for energy products.”
