The six countries forming the Gulf Cooperation Council (GCC) will remain heavily dependent on hydrocarbon production for at least the next ten years, despite efforts to diversify their economies, Moody's said yesterday.
"If oil prices average $55/barrel … we expect hydrocarbon production to remain the single largest contributor to GCC sovereigns' GDP, the main source of government revenue and, therefore, the key driver of fiscal strength over at least the next decade," the rating agency said in a report.
"While we expect the diversification momentum to pick up, it will be dampened by reduced availability of resources to fund diversification projects in a lower oil price environment and by intra-GCC competition," it added.
The report noted that the imposition of extensive income taxes would contribute to reducing dependence on oil as a primary source of revenue.
Saudi Arabia, Kuwait, the UAE, Oman, Bahrain, and Qatar have intensified their efforts to diversify their sources of income since the collapse of oil prices in 2015.