The quarterly report of the "Conference Board Gulf" Center for Economic and Trade Research stated that the Gulf countries face a negative view, expecting the region's GDP to decline by 5.9 percent this year compared to 2019, before growing by 2.2 percent in the year Next, Kuwait’s GDP will likely drop 7.3 percent this year, with its growth reaching 2.4 percent at 2021.
The center's report for the first quarter of this year pointed out that the Gulf countries, whose economy is still largely dependent on oil, will face a scenario of what can be called a "perfect storm", as a result of the Corona virus, which was exacerbated by the shock of the global demand collapse and pushed oil prices to fall The free market, while the historic oil production reduction agreement has barely improved prices.
The report suggested that the fiscal deficit in the region will widen significantly in 2020, and that it remains in the negative region in the short term, as most Gulf countries are still trying to recover from the collapse of oil prices in 2014, indicating that the authorities in the Gulf had to intervene strongly through packages Financial and monetary support to alleviate the effects of this crisis, which added more pressure on the budgets of these countries.
He pointed out that with the acceleration of the depletion of foreign reserves and the mounting pressure on their linked currencies, the Gulf countries will have to turn to global markets and sovereign wealth funds to finance the fiscal deficit, highlighting once again the urgent need to reduce the region's budget dependency on oil and gas revenues.
The report pointed out that the containment measures imposed in more than 180 countries around the world restricted the movement, flight and trade, which constitute nearly 60 percent of the global demand for oil, noting that, according to the International Energy Agency (IEA), by the end of March, the transport activity was Onshore globally is almost 50 percent less than the average for 2019, while the drop for aviation was about 60 percent.
He expected oil demand to decline by 29 million barrels per day in April, and in a smaller amount in May, with most countries remaining under restrictions, noting that this way, and by the end of 2020, the oil demand gap will remain large, and is likely to decrease by more From 15 million barrels per day on an annual basis this year.
The report suggested that the contraction of gross domestic product in the Gulf region in 2020 will follow a moderate recovery in 2021, indicating that a significant reduction in oil production will lead to a reduction of between 2.5 and 3.5 percent in the GDP growth of the Gulf states this year, especially Countries most dependent on oil revenues such as Kuwait and Oman.
He explained that the scenario used to recover the economies of the Gulf countries in the form of the letter "U" with the gradual and slow opening of the economy and the return of social activities, expecting the region's GDP to drop by about 5.9 percent in 2020, and then recover by 2.2 percent growth next year, in line with the outbreak scenario The long term of the IMF, not its baseline scenario, is the “V” recovery. Ended / 25
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