Report: Drop in oil prices to slow GCC economic growth in 2016

The fall in oil prices is expected to take its toll on the economic growth of Gulf Cooperation Council (GCC) countries in 2016, a new study revealed.

In a report published yesterday, Capital Economics said: “Gulf economies have weathered the storm created by the fall in oil prices so far, but 2016 is likely to be the year in which low energy prices begin to weigh on growth.”

The London based think tank did not expect the GCC countries to devalue their currencies, but said they may pave the way for a tighter fiscal policy.

The GCC member states peg their currencies to the US dollar, limiting their chances of enjoying independent monetary policies.

The report expected a below-consensus GDP growth in the Gulf as a whole of just 1 to 2 percent over the next few years, which would; aside from the global financial crisis be the weakest rates seen since the turn of the millennium.

According to the report, Saudi’s economic growth is expected to sharply decline in 2016 and it is predicted that the government will cut spending.

According to the report Qatar is also expected to be affected by the falling oil prices in 2016.

Kuwait, Bahrain and Oman are expected to be most affected by falling prices, the report adds.

GCC countries, including Saudi Arabia, the UAE, Kuwait, Bahrain, Qatar and Oman, heavily depend largely on oil revenues to fund their budgets.