Al-Marsad newspaper: The writer Badr bin Saud said: “In this May, the US Reserve Bank increased the interest rate, bringing it to 50 points, or half a percent, and the increase is expected to continue until 2023, and reach 300 points or 3% unless these numbers exceed In 1990 and 1991 it reached 20%.
Inflation and the repercussions of the Ukrainian crisis
And he continued, during an article published in the newspaper, “Okaz” entitled “The Saudis are ready before the Fed.” This comes as a reaction to the inflation that exceeded 8.5%, which did not happen until 1982, and the reason for this was the high rates of consumer spending for individuals during the past two years, and with it the reduction of Interest rates to zero levels in the major industrialized countries, especially in America and Europe, all of which came to address the repercussions of the Ukrainian crisis, and the rise in oil and gas prices and agricultural crops by 30%, and coincided with attempts to economic recovery from Corona.
Bank for International Settlements
He added: The Bank for International Settlements used the data of 21 economies in emerging markets, or those that have moved from the stage of dependence on agriculture and exporting raw materials to the stage of manufacturing, and have become more integrated with global markets, and the income level of their people is from low to medium, and examples are Egypt, Russia and Turkey, In its data that covered the period between 1990 and 2019, the Bank noted that every 1% increase in the dollar leads to a decrease in economic growth for emerging markets, by half a percent.
Reducing support programs and social spending
And he added: What was said may cause a reduction in support programs and social spending, disruption of the development process, bankruptcy of companies, an increase in unemployment numbers, deterioration of living conditions, and raising interest rates will raise the cost of foreign imports and with it government debt, particularly in countries that have high levels of debt in dollars, most notably Indonesia. Brazil, Mexico, South Africa and Turkey, especially since the debts of these markets were estimated in 2020 at regarding four trillion dollars.
Gulf countries
He continued: The decision will certainly affect the Gulf states and the Arab region, and may lead to the exodus of foreign investors from their markets, and the tendency to invest in the American market, and the decrease in currency rates compared to the dollar will result in an increase in the prices of various products, because their purchasing power will decline, but it will decrease in the future. The debts of the Arabs, according to a study by the UN ESCWA Committee, amounted to one trillion and four hundred billion dollars in 2020, and this represents 60% of the gross domestic product of Arab countries.
Saudi Ministry of Finance
He concluded his article by saying: The Saudi Ministry of Finance pre-empted the American measure, and linked part of its reserves to local banks, and the Saudi Central Bank raised the interest rate, and it will continue to raise it to enhance the country’s competitive capabilities, and to achieve monetary and financial stability, and according to Ipsos International statistics for 2022, the Kingdom topped the list 27 countries around the world in the political and social fields, in which the Saudis recorded confidence in the government’s procedures and systems in the Kingdom, and that they were less worried regarding inflation by 10% compared to a global concern of up to 32%, and were less concerned regarding unemployment by 15%, while the global average reached 31%.
