New Delhi, February 8, 2020: Based on the oil economy Middle East is considered as the richest spot on this earth. Nevertheless, it is unlikely to enjoy this privilege for long. According to a report by International Monetary Fund, these nations will loose their wealth by 2034.
What report says
International organization says that the Gulf Arab states’ can see their financial wealth depleted in the next 15 years. This is amid lower hydrocarbon revenues. On the other hand, slowing oil demand has added to the woes.
Fiscal reforms needed
As per the IMF estimates, six nation Gulf Cooperation Council’s (GCC), net financial wealth is at $2 trillion. It constitutes for over one fifth of global oil supply. Yet the economies in the region have been hit hard. Similarly, there had been a drop in the oil prices in 2014 and 2015.
Governments under pressure
GCC Governments are under pressure to generate non- oil revenues. Therefore fiscal reforms are needed to contain the imbalance. The hydrocarbon revenues are lower which is making the condition worse.
Demand could peak
Organization said that the oil demand could peak by around 2040 or much sooner. This will happen in case of a stronger regulatory push for environmental protection and energy efficiency. As per the report, all GCC countries have recognized the lasting nature of their challenge. IMF stressed that the reforms are underway but they need to be accelerated.
A few already diversifying
Sighting the upcoming challenges a few of the states are already diversifying. They are increasing its dependency on non-oil revenues. For instance Dubai a major city in UAE is specializing in Tourism and Luxury segment. In addition to that, it is the hub of ultramodern architecture. Burj Khalifa, an 830m-tall tower, dominates its skyscraper filled skyline.
The Cooperation Council for the Arab States of the Gulf is originally known as the GCC. It is a regional intergovernmental political and economic union. Member nation off GCC are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE.