ECONOMY -GULF FEELS THE EURO EFFECT.Summary: If Greece leaves the Euro the impact will be indirect but significant for the Gulf, say experts. TEXT BY NEIL CHURCHILL Neil O. Churchill (c. 1890–) was a car dealer in Bismarck, North Dakota who funded an integrated baseball team in the mid-thirties more than a decade before Jackie Robinson broke the color barrier in Major League Baseball.
Last month greece went to the polls for a second time, its Euro future hanging in the balance. Spain finally threw in the towel and requested a long-awaited bailout bailout
The financial rescue of a faltering business or other organization. Government guarantees for loans made to Chrysler Corporation constituted a bailout. . They received $126 billion. Shortly afterwards Greece voted into power the pro-bailout New Democracy party; the two developments offering the thinnest of lights at the end of a dreary, debt-laden tunnel.
But all is still far from well in the Eurozone Eurozone
same as Euroland
Eurozone n → eurozona, zona euro
Eurozone n → zona euro . Will those bailouts be enough to save the ailing European economies and their debt-laden peers from falling by the wayside? Will the Euro survive if one of the weaker limbs is cut off? No one knows for sure. This is a unique situation without precedent. One pertinent question here in the Gulf is whatever happens, will business in the region be affected?
Should a 'Grexit' occur, some local economists believe it will rattle confidence in the Gulf economy, lowering oil prices and impacting the local stock markets. Others believe it will be far worse than that.
"With the Eurozone we're not talking about a single event, it'll go on and on for at least a decade or more," says Dr Yuwa Hedrick-Wong, global economic advisor to MasterCard. "We are talking about a crisis converting into a disaster. The global outlook will continue to be very volatile."
M.R. Raghu, senior vice president at Kuwait Financial Centre, believes the impact would be indirect but the collateral damage collateral damage Surgery A popular term for any undesired but unavoidable co-morbidity associated with a therapy–eg, chemotherapy-induced CD to the BM and GI tract as a side effect of destroying tumor cells would still be significant enough to impact local stock markets, investor confidence and trade links.
"There is no direct relationship between Greece and the Gulf from a trade perspective so the direct impact on the Gulf will probably be miniscule min·is·cule
Variant of minuscule.
Adj. 1. miniscule - very small; "a minuscule kitchen"; "a minuscule amount of rain fell"
minuscule . But the collateral damage will be very significant.
"The exit of Greece from the Eurozone will rattle confidence in the currency and stock markets and impact global growth. The knock-on effect will have an impact on local economies and will lower oil prices throughout the region," said Raghu.
"Local stock markets will also be affected as they increasingly react to world events. So if the global markets react sharply to the news, which is what we're already seeing now, then weaknesses in local markets may appear.
"Things are evolving by the minute with the Greece situation," Raghu said. "The possibility of an exit is no longer talked about as a rumour but is now being valued as a real option. It's very worrying; it will have a contagion Contagion
The likelihood of significant economic changes in one country spreading to other countries. This can refer to either economic booms or economic crises.
An infamous example is the "Asian Contagion" that occurred in 1997 and started in Thailand. effect."
Though the possibility of the Eurozone contagion is possible, one expert believes the GCC's close trade with Asia will be the region's saving grace.
"Should there be any Greek event, the main channel of contagion to the real economy will be through trade/exports," said Philippe Dauba-Pantanacce, senior economist at Standard Chartered Bank.
"But Asia is now the GCC's main export market, while the EU represents only seven per cent. So the channel of contagion will be indirect. A collapse in Asian demand, coupled with already muted growth in the West, would certainly translate into lower oil prices and output.
"One of the most severe effects is likely to come through financing channels. Tight credit has been prevalent in the region in the past few years, and a more acute shortage of bank liquidity would turn into even tighter credit, both for households and for corporates and sovereigns wanting to tap debt instruments.
"It is important to also note that the traditional role of European banks had diminished already in recent years, to the benefit of other sources of financing, including banking from emerging Asian countries."
At the time of writing the Gulf's economies and markets continue to watch and wait nervously.
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