"Although the GCC economies exhibited remarkable resilience during the economic turmoil, they remain exposed to potential sources of renewed macroeconomic volatility in the medium term," Jarmo Kotilaine, chief economist of NCB Capital, stated in this month's GCC Monthly Economic Bulletin.

In addition to increasingly sticky and elevated inflationary expectations, he pointed out that there are external pressures to consider, most notably in the area of food where the reliance of imports has grown dramatically.

"Moreover," he added, "some markets, especially Saudi Arabia, face persistent housing constraints and hence rental price pressures."

"As the experience of the past two years demonstrates, the oil price-even after years of deliberate economic diversification-remains the single most important risk factor, with the potential to trigger a recession but also to fuel an inflationary boom," he added. 

Kotilaine continued: "The key to sustainable growth is a timely evolution to private sector-led growth. Lack of progress here, partly due to a succession of high-profile defaults, explains why the GCC has lagged many of its emerging market peers in terms of equity market performance. Overcoming this chasm remains one of the key challenges for 2010."

The regional financial sector has shown resilience, partly thanks to strong and consistent support by the regulators, but lending has remained very subdued to date. Moreover, he added that with IPOs (initial public offerings) and debt capital issuance still depressed, capital is still constrained and sentiment has been slow to recover to pre-crisis levels.

However, he noted that the regional risk profile is increasingly uneven with the potential discontinuities mainly concentrated in countries that experienced the faster financial sector and real estate expansion during the boom.

The relative fiscal health of the region remains an effective line of defense for even a renewed downturn. 

Saudi government debt stands at 16 percent of GDP and the country's credit rating has further improved during the crisis as reflected in a recent upgrade by Moody's.

Saudi Arabia's foreign and local currency government debt ratings were increased from A1 to Aa3, the fourth-highest grade, with a stable outlook.