The states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates collectively make up the Gulf Cooperation Council (GCC), and according to the International Monetary Fund collectively stand to lose nearly a third of a trillion dollars this year as a result of the recent crash in the price of oil. According the the IMF, those losses are equivalent to some 21 percent of the GCC’s collective GDP. The FT reports:
The six-member Gulf Co-operation Council states’ oil export earnings are expected to fall by $300bn, or one-fifth of their overall economy, when compared to the IMF’s previous projections in October. The IMF says those worst affected will be Kuwait, Qatar, Iraq, Oman, Libya, and Saudi Arabia.All Gulf states, with the exception of Kuwait, are expected to have to fund fiscal deficits this year in response to “rising social pressures and infrastructure development goals” and plunging oil prices. The GCC’s collective fiscal surplus of 4.6 per cent of GDP in 2014 is projected to drop to a deficit of 6.3 per cent of GDP this year.
Just about every oil exporting country is expected to run a budget deficit this year as they struggle to come to terms with an oil price less than half of what it was seven months ago. For Arab states, this is especially problematic, as many in that region of the world boosted government spending in recent years in response to waves unrest associated with the Arab Spring. Those ballooning budgets were made possible by a period of sustained $100+ per barrel oil prices, but recent events are turning the screws on petrostates around the world.