Leveraging Monetary Policy Tools Critical For Qatar, GCC Economies

(MENAFN- The Peninsula) Joel Johnson | The Peninsula

Doha: Global markets experienced intense declines last week, the highest ever since 1987. Japan's NIKKEI 225 stock index fell by almost 13 percent in a single session due to weak US economic data, in particular to rising unemployment, which resulted in worse-than-expected.

Market experts note that financial stability is vital for a positive and stable outlook across the globe, especially in Qatar and across the region by stimulating strategic methods to eschew menacing economies.

Dr. Mohamed Eskandar Shah, Associate Professor of Islamic Finance, College of Islamic Studies, Hamad Bin Khalifa University (HBKU) said:“For countries like Qatar, leveraging monetary policy tools is crucial. A lower interest rate can reduce funding costs, and Qatar's fiscal surplus provides the government with the capacity to inject new stimulus measures to counteract economic slowdowns.”

He stressed that“Accelerating these diversification efforts and maintaining fiscal and monetary agility are key to ensuring the region's long.”

The fall of stocks impacted economic recession, which affected most of the global economies, resulting in plunging commodity markets, as prices for oil and gold sank. Analysts note that other factors contributing to the market crash include carry trades, and geopolitical concerns, in addition to the swiftly evolving political landscape in the US with its elections approaching soon. Shah explained“The significant plunge in the stock market on August 5th was unexpected, catching many by surprise. The overreaction seems exaggerated, particularly given that most future risks had already been factored into expert predictions. Nonetheless, the market seems to be jittered by the negative outlook for the US unemployment rate, the unwinding of yen-funded carry trades, uncertainties surrounding imminent Federal Reserve rate cuts, and the upcoming US elections in November.”

“The pertinent question is whether the current market volatility will persist and significantly affect the global economic outlook, particularly for GCC economies,” Shah said.

He further added“The market shock serves as a stark reminder of potential future challenges and a warning for policymakers to brace for impending headwinds. Despite the uncertainties, it is evident that the GCC is on a path towards economic diversification. Policymakers must expedite efforts to reduce reliance on hydrocarbons, emphasizing investments in high-technology industries, tourism, and manufacturing.”

During a recent interview with QNA, Investment Advisor Ramzi Qasmieh attributed the absence of full recovery to the elevated levels of fear among global investors, especially given ongoing concerns about potential economic recession risks amid a high-interest-rate environment, and the economic confrontation between the US, China, and Europe through the imposition of protective tariffs.

However, reports indicate that the stocks are slowly recovering from their fall as the Asian market soared yesterday albeit worries regarding the US recession persist.

Yesterday, Tokyo's key Nikkei index bounced 3.45 percent with emotion bolstered by a rally in US tech shares as traders returned from a long weekend break.

On the other hand, the Qatar Stock Exchange closed lower yesterday with the index losing 22.120 points, or 0.22 percent, to reach 10,071.4 points. The shares of 13 companies surged, whereas 36 companies saw a drop, and three other companies maintained their previous closing prices.

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