Magazine article The Middle East

GCC: Falling Oil Price Impacts on Growth

Magazine article The Middle East

GCC: Falling Oil Price Impacts on Growth

Article excerpt

Lower oil prices have impacted economic growth in the Gulf Cooperation Council countries, a report by the global trade credit insurance provider Coface has found.

The GCC economies are set to grow by around 3.4 per cent this year and 3.7 percent in 2016--lower than previous years. "While these rates are considered high compared to other emerging markets, they remain below the region's average growth rate of 5.8 per cent between 2000 and 2011," the report said.

The six GCC countries currently hold 30 per cent of the world's proven oil reserves with Saudi Arabia accounting for 15.7 percent, Kuwait for 6 percent and the UAE for 5.8 percent. Together, they produced 28.6 million barrels per day of oil in 2014, equivalent to 32.3 percent of total global production.

Oil prices have fallen from around $114 per barrel in June 2014, to around $50 in this year, dampening GCC government revenues. However, the report also clarified that not all markets have reacted in the same way. The decline in oil prices affected Oman and Bahrain the most, whereas Saudi Arabia, UAE, Kuwait and Qatar fared better.

"The more resilient economies benefit from strong macroeconomic fundamentals, such as more diversification, solid financial buffers and greater integration with world trade. The developed manufacturing and service industries in these markets allow less dependence on oil revenues," the report noted.

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