GCC deficit spending will not continue forever, bank warns | The National

GCC deficit spending will not continue forever, bank warns | The National:

"Government spending has helped to keep the wheels of the Arabian Gulf’s non-oil economies greased in the past two years as oil prices crashed, but that resilience may wane if the price of crude does not rebound soon, according to the investment bank Alkhabeer Capital.

Deficits in countries in the region including the UAE and Saudi Arabia have widened over the past year as the more than 60 per cent drop in oil prices empties coffers and forces governments to dip into sovereign wealth funds and borrow more money to keep spending on infrastructure and social services.

“Growth in the non-oil sector continues to outpace the rate of expansion seen in the region’s hydrocarbon sector. It cannot continue to remain largely resilient to low oil prices for a prolonged period, especially if we consider the high reliance of the Gulf economies on government expenditure," the investment bank wrote."



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