Oil exporting country’s economies in the Arab region are expected to shrink by 4.7 percent this year due to the coronavirus pandemic, according to the 12th edition of the Arab Economic Outlook Report.
The report says that the diversified economies in the region will shrink by 2 percent in 2020.
Most of the countries in the region are major oil exporters such as Saudi Arabia, UAE, Oman and their economies heavily relies on oil.
However, this year, we have seen oil prices plunging to record low and also demand decreasing as a result of the pandemic.
Also, Arab oil exporting countries are more likely to bear nearly half of the burden of the oil supply cuts in 2020 and 2021 approved by the OPEC+ agreement, which will have a major impact on Arab economies.
According to reports, the oil sector continues to contribute about 27 percent of the Arab economies’ GDP, 42 percent of total exports, and 60 percent of public revenues.
In recent years, the economies in the region have taken various steps to reduce their dependence to oil.
The GDP of the gulf nations will contract sharply this year, however, they are set to recover in 2021, a poll carried out by Reuters revealed.
The economic contraction for the Gulf countries will be caused by the Covid-19 pandemic as well as the depleting oil prices.
Analysts participating in the poll see a deep economic contraction in the hydrocarbon-producing region this year as oil prices were hit on the supply and demand sides simultaneously.