AS AMERICA STUMBLES, THE GULF STEPS UP

While a US shutdown shakes up global markets, Gulf economies emerge as stable havens for capital

- BY HASNAE TALEB

The global financial system thrives on predictability. For decades, the US dollar has been the world's ultimate anchor, absorbing shocks, setting benchmarks, and dominating global trade. But Washington's latest government shutdown has turned that assumption upside down.

What was once dismissed as temporary gridlock is now perceived as a deeper structural dysfunction, raising doubts over America's ability to manage its own finances. Shutdowns often pass without major financial disruption, but in today's context, the timing renders this one far more disruptive.

There is no doubt the consequences of the shutdown are immediate and far-reaching. It is costing the US economy around $7 billion each week, reducing Q4 GDP by 0.1 percentage points.

More damaging, however, is the paralysis of institutions, including layoffs in unfunded programmes, a freeze in the release of key data on jobs and inflation, and the suspension of services ranging from mortgage processing to small business loans.

The shutdown is also deepening global worries about America's institutional credibility, fiscal stability, and mounting dysfunction, said Luke Bartholomew, deputy chief economist at Aberdeen, a UK-based wealth and investment group.

He noted that the Trump administration appears unusually willing to expend political capital on reshaping and influencing the Federal Reserve, an institution he described as the cornerstone of global capital markets. That pressure, he warned, is weighing on long-term yields and could persist for some time.