The GCC countries have faced a substantial decline in the average GDP as a result of the coronavirus outbreak and the plunge in oil prices. These two major events are highly correlated due to the restrictive measurements imposed by the Governments on mobility and transportation, which have led to a deep recession in many different business sectors, especially tourism and aviation, impacted the finances of many people and increase the risks of financial stability.
However, according to the International Institute of Finance (IFF) the GCC countries have a major advantage in the international scenario from their large official reserves. Only UAE has $800 billion dollar as foreign currency reserves, which is 220% of their GDP.
Thanks to the high liquidity, GCC countries can use these resources for mitigate the losses associated with low oil prices and by mobilizing additional revenues from alternative source of income such as, as per UAE situation, in the form of higher VAT, and cuts on current spending in the public sector.
Even IMF (International Monetary Fund) has projected a relatively strong recovery in the region in 2021 in the overall real GDP of approximately 4.6 per cent.
As you can see below you can see the impact of the non-oil real GDP and the fiscal balance GDP.
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