Construction in the Middle East continues to grow faster than in other parts of the world, but it looks like the current steep boom could soon be over. Soaring inflation has emerged as a key challenge for the Gulf Cooperation Council (GCC) - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates (UAE) - economies. These countries now need to take tough political decisions otherwise growth will suffer and foreign investors will be deterred - especially from non-oil sectors. Within the six-member group, Qatar and the UAE have the highest inflation rates, currently running in double digits. Saudi Arabia and Kuwait are also experiencing record inflation levels, while rapid price growth has been seen in Oman as well. Inflation in Bahrain has been increasing, but at far more moderate rates than in other GCC members. The causes are a direct result of the region's success. Windfall oil revenues arising from global oil prices have led to rapid monetary expansion, excess liquidity and accelerated government spending.
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