“GCC monetary policy is wrong,” said Lyons. “There is an overwhelming case for a different monetary policy But if this is ruled out, then you need a plan B. You need pretty quickly to develop the capital markets and a fiscal policy as a substitute.”

Lyons said that he believed the US is now less sensitive about a possible revaluation of Gulf currencies against the dollar.

“Last November, the US did not want the region to revalue,” he said, but added that recent signs that the dollar has bottomed out had made Washington more relaxed about the issue.