Gulf economies could be affected this year due to oil price declines, but liquidity is adequate and credit still growing, according to central bankers.

Sultan Nasser Al Suweidi, the UAE central bank governor, told a regional banking conference he did not expect oil prices to average more than $40-44 per barrel this year, a far cry from near $150 in July 2008, the peak of a regional economic boom.

Saudi Arabia’s central bank governor said the world’s top oil exporter continued to support a policy of pegging its currency to the dollar and voiced confidence in the US handling of the crisis.

Al Suweidi also said the new single currency could be pegged to the US dollar. He ruled out interest rate cuts in the near future. Echoing growing concerns that low oil prices pose a challenge, Shaikh Khalifa bin Zayed Al Nahyan, UAE President, said that $70-$75 a barrel would be a fair price for oil. The oil price boom enabled the Gulf states to pour windfall revenues into projects designed to reduce their reliance on the volatile commodity.

Oman, Bahrain and Qatar said they expected growth rates to halve this year and the UAE and Kuwait said their economies could contract this year.