Middle East’s ’empty broken shopping baskets’ —they looked at the wrong numbers

The road to Damascus from the Lebanese border leaves nobody in doubt who has won the war that’s cast a dark shadow over the Middle East for eight years. “Welcome to victorious Syria,” a billboard says with a picture of a beaming President Bashar al-Assad superimposed over the country’s red, white and black flag.

Waiting 19 Hours for Gas in a Lifeless City – The war in Syria is now an economic one and a visit to Damascus shows how people are struggling to find essentials. 

CRIMSON TAZVINZWA, AIWA! NO!Inflation in the Middle East is typified by the same economic factors affecting most Sub Saharan AFRICAN countries.

Across the world, surging international food prices have become a major cause for concern and topic of debate. This is especially so in the Arab world, which is home to some of the largest food importers and where rising food prices have been one of the factors in recent political unrest.

In the context of ongoing political developments, governments across the region are responding to the rise in commodity prices with hikes in fuel and food subsidies, civil service wage and pension increases, additional cash transfers, tax reductions, and other spending increases. These measures will help poor households maintain their purchasing power and limit further increases in domestic food prices.

How should central banks—whose task is to prevent general price increases that would further cut into peoples’ incomes—react? What inflation metric should they target?

In my mind while Africa has some of the most valuable resources on the planet, the continent has not been able to cook its own food and eat it. There is an inherent problem of over-dependance on imports (some of which are most basic- foodstuffs for instance) and this costs money; and consequently eats into forex reserves.

If the Middle East and Africa need to curb inflation in the long term they will need to do four things: invest, produce, manufacture and export (trade). This approach does not only bring in money but also employment.

  1. Fully agree with crimson and nothing to tell in excess as everything told by the person. Middle East needs to really produce some more things and trade potentially to reduce the inflation pressure. Africa and Middle east countries’ over-dependency on their own resources are jerking their own economical infrastructures and it’s the reason of growing inflation.

  2. Absolutely, but please, in circumstances when banks are undercapitalized, consider what that means for those borrowings that generate much higher capital requirements. In Europe, Basel II territory, the lending to small businesses and entrepreneurs requires the banks to have 5 TIMES more capital than lending to the triple-A rated and which is effectively curtailing the credit to those who might provide the most dynamism to the economy.

    And all for absolutely no good precautionary or prudent reason at all, since the problems for regulators are almost nonexistent when the credit ratings are correct, the problems are when they are not correct. The capital requirements for banks we most need are those to take care of wrongly perceived risk, and not as now, those that push the banks to act even more on the perceived risks. And Basel III also ignores this… when will they ever learn?

  3. http://insurancemoney.blogspot.com
    Insurance is one of the critical obligations all of us has to consider whether it be health, home, or car insurance. People buy insurance policies for various reasons. Sometimes, the law mandates the purchase of these policies while the other times they are just a choice.

  4. The Middle East is a total melting pot and people will continue to rise against dictators who think they are above law and the people.
    I found some interesting reading at http://www.newsletters2u.com which will bring some clearity to the whole issue.

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