GCC: Budget deficits to rock states by 2015, IMF

GCCMembers of the Gulf Cooperation Council namely Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain could be facing serious economic woes and budget deficits as early as 2015, the International Monetary Fund (IMF) has warned. The unemployment gap is alsoexpected to increase especially in the private sector. IMF blames the management policies of the states.
In the report carrying the alarming signals, IMF called for policies to be reformed in order to limit the effects. It expects growth to rise a little above 4% annually from 2013-2018; compared to the 15% clip seen over the last decade, its data shows.
The report underlined that the risks linked to the dependency on oil revenue and urged the countries to “build or strengthen their fiscal and external buffers”. The IMF claimed that the implementations of the necessary reforms and budget cuts won’t be enough to save certain countries from having budget deficits.
Oman is expected to join Bahrain as a state with a budget deficit in 2015 and oil rich Saudi Arabia is expected to follow three years later. IMF stated that “the tightness caused by unexpected production disruptions and elevated geopolitical risks in the summer of 2013, a combination of weak global oil demand growth and strong supply growth from unconventional sources in the non-OPEC countries” are principal factors of their decline. It expects the demand for oil to fall to around half a million barrels per day by 2016.
The countries are advised to diversify their economies which have been massively dependent on oil revenue.
Private companies could also come under pressure as the public sector reaches it limit by 2018. They are projected to create only 600,000 jobs for more a million people entering the market.