Moody's: Inflation may affect Middle East

High and accelerating inflation could potentially hit some Middle East sovereign ratings as it sharpens political and economic risks, Moody's Investors Service said.

The ratings of poorer, non-oil-exporting countries are more likely to be affected in the shorter term by high inflation because of their enhanced social and fiscal vulnerabilities, Moody's said.

However, even the ratings of affluent, oil-exporting sovereigns could be affected over the longer term if high price growth persists, the agency said.

Inflation can affect sovereign ratings indirectly through three main channels - fiscal, political and economic - and Moody's said it is beginning to observe such trends among Middle Eastern sovereigns.

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