The sharp drop in oil prices will probably allow Saudi Arabia and a few other oil powers to gain market share, but it will also be a massive hit for their economic future.
According to the International Monetary Fund (IMF), lowest oil prices ever and the impact of the coronavirus Covid-19 pandemic will decrease Arab world’s economy by 12 percent – or $323bn.
“The Covid-19 pandemic and the plunge in oil prices are causing significant economic turmoil in the region (…) the impact could be long lasting,” said the latest IMF Regional Economic Outlook which added that Arab governments’ debt could rise by 15 percent – or $190bn.
“While there is considerable uncertainty around the depth and duration of the crisis, this pandemic will compound the Middle East North Africa (MENA) region’s unemployment problem and worsen the already high public and external debt,” it underlined.
Also, in the direct neighborhood of rich countries like Saudi Arabia or the UAE, more severe geopolitical challenges could emerge, in Yemen for instance where both the security and humanitarian situations deteriorated further.
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