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Gulf states GDP expected to contract by 5.9% in 2020

Gulf states GDP expected to contract by 5.9% in 2020
The GCC is forecast to witness an economic recovery

Mubasher: The gross domestic product (GDP) of the Arabian Gulf countries is expected to retract by 5.9% in 2020 when compared to 2019, as the world economy is suffering from the consequence of the coronavirus (COVID-19) pandemic.

Fiscal deficit in the Gulf countries is projected to sharply rise in 2020, settling on a negative note in the short term amid efforts by most countries to recover from the 2014 oil price drop, according to a press release by the Conference Board.

The decrease in the GDP would come amid the OPEC+ agreement to cut oil production by 9.7 million barrels per day for May and June due to a decrease in oil prices and the pressure on storage capacities.

The reduction in oil production leads to a 2.5-3.5% decline in the GDP growth in 2020, namely for countries that mainly depend on oil revenues like Kuwait and Oman. 

However, the region is forecast to witness an economic recovery by 2.2% in 2021 with the resumption of businesses following a slight increase in oil production and improvement of the non-oil GDP by 2.1% year-on-year (YoY).