Gulf states have pledged $150-billion in response to the regional unrest, according to Bank of America Merrill Lynch estimates. But it may not be enough.
Gulf states have spent $150-billion as response to the regional unrest, according to Bank of America Merrill Lynch (BAML) estimates.
The figure makes up nearly 5% of the six countries' GDP for the year and constitutes around 57% of this year's combined spending.
"This has averted potential disquiet over governance in most countries, though, over a longer-term horizon, economic reforms will be needed to buoy private sector growth and job creation," says BAML in a note.
"We expect the oil boom-led economic diversification program set up after the lost decade of the 1990s to continue over the next decade, unless oil settles in a marked or sustained manner below the regional breakeven price (US$80)."
But in the Gulf states' haste to create jobs, there is a danger of overcapacity in certain sectors.
There are close to $1.8 trillion projects under way in the Gulf, according to Citibank, with close to $600-billion worth of projects in Saudi Arabia alone. Of these, nearly $180-billion are in early stages of development, apart from $130-billion in the UAE.
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