(Crealis) -- Dun & Bradstreet has released its latest round of D&B Country Risk Indicator for the GCC countries for the month of December 2008 in which it "believes the region, with its vast reserves built across record oil prices in the last few years, will be able to stand tall in these testing times."

The DB country risk indicator is released monthly and provides a comparative, cross-border assessment of the risk of doing business in a country. The DB risk indicator is a composite index of four risk categories: political risk, commercial risk, external risk and macroeconomic risk. The DB risk indicator is divided into seven bands, ranging from DB1 through DB7. Each band is subdivided into quartiles (a-d) with an 'a' representing slightly lesser risk than a 'b' designation and so on.

The GCC countries, which were once considered immune to the financial crisis, have finally caught some symptoms of the credit disease. Over the past couple of months, the region has been hit by liquidity crunch much alike other emerging economies of the world. The general theme going around these days is the falling government revenues due to plummeting oil prices.

There have been questions raised about the financing of current projects in the region, which has resulted in rounds of pessimism flowing over the growth prospects of the regional economy in the near term.

"The government will step-up its efforts to ensure proper flow of money into the system in order to shun ill effects of the crisis. Meanwhile, there is a brighter side to the current situation in terms of record inflation experienced in the region, which is expected to improve as demand in the economy cools down. With the correction in property prices and subsequent fall in rents, the inflation level will begin to deteriorate. The recent appreciation of the greenback will also help curtail the "imported inflation" which tends to be a major contributor to the general escalation in the prices of commodities. The strength of the region is reiterated by the ratings given to each of the country, which indicates strong base for the local governments to fight the global financial crisis," notes Dheeraj Shahdadpuri, analyst at Dun & Bradstreet.

The D&B Country Risk Indicator has assigned DB2d rating to the region's biggest economy, Saudi Arabia, indicating a solid position to withstand the current global financial crisis. The ratings come in line with the government of Saudi Arabia taking serious actions to boost liquidity in the system by reducing the repurchase rate from 4.0% to 3.0%; together with a reduction in the commercial banks' cash reserve requirements, from 10.0% to 7.0%, aimed at increasing credit availability to meet business demand. The shortage of liquidity in the financial system has however helped the country in lowering the inflation level slightly to 10.35% in the month of September, down from an annual average of 10.90% for the previous month.

D&B has also lowered the inflation forecast for the country from 5.3% to 3.8% annual average, with lower international food prices which will significantly bring down the import bill of the country.

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