As global shocks tightened financing conditions, and oil production and prices declined, the global financial crisis took its toll, particularly on the U.A.E., Kuwait, and Bahrain, given their linkages with global equity and credit markets. Across the region, economic activity contracted in the second half of 2008 and the first half of 2009, and was accompanied by a decline in credit, broad money growth, and inflation. Decisive policy actions by the authorities have helped moderate the effect of the crisis, although its full impact, particularly on the financial sector, may not have materialized yet.
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