Speaking at the Annual Investment Summit in Dubai, Carla Slim, Chief Economist for the Middle East and Pakistan at Standard Chartered Bank in Dubai, was candid in her remarks: «Our clients mainly want to know how inflation will develop in the coming year and whether there will be spillover effects from the U.S.,» she said to an audience of Dubai’s financial elite. «Yes, the ghost of inflation hasn’t disappeared,» she warned.

One of the key promises of Trump 2.0 was to bring down consumer prices. «But that’s unlikely to be achievable in 2026,» Slim argued.
Price increases over several upcoming periods would mainly affect the U.S., and stay there—primarily due to higher tariffs on foreign goods. These costs, she said, would be passed on by importers to American consumers.

«Not a Second Ukraine Scenario»

«The current environment is very different from the global inflation wave triggered by the escalation of the war in Ukraine in February 2022,» Slim noted. «Today, inflation trends vary widely across different parts of the world.» According to Slim, regions at the heart of global trade flows—such as the Middle East—are barely affected by U.S. inflation. The ongoing weakness of the U.S. dollar might slightly raise inflation in the Gulf States, whose currencies are pegged to the greenback. But in East Asia, the picture looks different:
«U.S. tariffs are likely to slow growth in Asia, which in turn will result in imported disinflation for the rest of the world,» Slim explained.

Disinflation refers to a decline in the inflation rate—that is, prices are still rising, but at a slower pace. This is clearly different from deflation, where prices actually fall. Despite the recent cooling, the U.S. inflation rate remains above the Federal Reserve’s long-term target of around 2 percent. In April 2025, the annual rate dropped to about 2.31 percent, but rose again to 2.70 percent by July.

Impact on Foreign Direct Investments (FDI)

«So, what we see here is a highly nuanced picture,» Slim summarized. «These developments will also affect international capital flows in 2026 in relation to FDI», she added.  Investors typically prefer countries with low inflation, because it allows for better forecasting of costs, revenues, and profits. It also keeps interest rates low, which supports cheaper financing.»