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Doha
The sharp decline in oil prices exacerbated by demand loss from COVID-19 outbreak will result in $270 billion lost revenues for GCC countries, according to the International Monetary Fund (IMF).
The IMF’s latest Regional Economic Outlook (REO) said the oil exporters in the Middle East region are expected to face an overall economic contraction of 7.3 per cent. The contraction is 2 per cent larger than the IMF’s initial projections in April.
The large downward revisions for this group for both 2020 and 2021 (3.1 and 0.8 percentage points, respectively, compared to the April 2020 REO) reflect the “double whammy” from oil price fluctuations (and supply cuts) and the pandemic-linked lockdowns, the IMF report said.
“The larger-than expected production cuts implied by the OPEC+ agreements together with lower oil prices will have a negative impact on exports. These factors have led to a stronger-than-anticipated impact on activity in the first half of 2020, while the recovery is projected to be more gradual than previously forecast, in line with a weaker global recovery,” IMF Middle East and Central Asia Department Director Jihad Azour said.
Downward revisions in oil GDP reflects a sharper-than-anticipated drop in crude production. “Non-oil GDP in these economies has also been marked down as stay-at-home rules and other COVID-19 containment measures are causing larger-than-expected disruptions to the tourism, hospitality, transportation, and retail sectors,” said Azour.
The noted that while the oil importers benefit from lower oil prices, they are mostly being offset by hampered trade, tourism, and
remittances.
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14/07/2020
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