Global crisis and oil cuts slow down the Gulf countries growth
A Reuters investigation reveals the GDP of Saudi Arabia stops at 2.1 for 2019, compared to a 2.5% forecast. The average price of a barrel of oil also falls, below $ 70. Fears of overproduction and the decline in demand are weighing. Expert: "Less optimism".
Dubai (AsiaNews / Agencies) - The Gulf economies are set to grow at a slower pace than expected in the near future according to a quarterly survey published in recent days by Reuters experts. The group of 22 experts say the cuts in oil production, the fall in oil prices and a weakening of global growth have put pressure on the countries of the region.
They add the Gross Domestic Product (GDP) in Saudi Arabia, the most important Arabian Gulf economy and the largest oil exporter in the world, is expected to grow by 2.1% in 2019 and 2.2% next year. Only three months ago, the indexes spoke of 2.5% for the current year and 3% for the following year.
Last year, the reference price for Brent LCOc1 stood at $ 71.6 per barrel. This year the average is about $ 60 a barrel and, for economists, the figure for the entire 2019 should stop below the $ 70 threshold for lower demand and fears of overproduction.
The cuts to supplies decided by the Organization of Petroleum Exporting Countries and some non-OPEC nations, including Russia, could help to minimize prices. However, for experts, this policy of cuts will end up having repercussions on GDP growth.
In recent days, the International Monetary Fund (IMF) cut the estimates for 2019 and 2020 for the second time in just three months. The data on the growth of the global economy will stop at 3.5% for the current year and 3.6% for the following year.
"We are less optimistic than six months ago," stresses Khatija Haque, head of Mena Research at Emirates Nbd. Among the causes are lower expectations on oil prices, crude oil production cuts and the general growth prospects that become more obscure.
To curb the crisis, Riyadh intends to increase spending by 7% for 2019, reaching an unprecedented level, with the aim of increasing development in the non-oil sector. At the same time, the fiscal deficit is expected to increase by 5.6% of GDP from 4% for 2019 and 5.9% compared to 2.8% for 2020.
Saudi Arabia has committed itself to eliminating the state deficit by 2023.
The latest survey continues to provide a large budget and current account deficits for the two weaker Gulf economies, Bahrain and Oman.