The rating downgrade that rattled financial markets in August 2011 was of milder intensity compared to the 2008 tsunami financial crisis, whose impact is still being felt. However, the downgrade enabled to perpetuate one thing i.e., maintain the policy response intact which is where the catch is. The world will have a low interest rate environment at least for another one to two years and may lay the foundation for yet another "Bubble-Burst" scenario. The direct consequence of rating downgrade is the increase in cost of capital. While the downgrade may not cause a double dip recession per se, it may subtly bring it about. Also, the notion that US dollar is the global reserve currency will come to intense argument. Let us look at the impact areas for GCC and its assessment.
