Middle East countries such as the United Arab Emirates (UAE), Saudi Arabia, Iraq, and Kuwait majorly depend on oil prices for most of the government spending as well as social programs. The recent collapse of oil prices stirred by the COVID-19 pandemic is expected to contract the region’s economies this year as per by International Monetary Fund (IMF). The oil price crash is anticipated to impact the growth of the country for a longer duration since the International Energy Agency (IEA) suggests that oil demand will remain negative at least until the second half of 2020. The oil market’s negative growth will also impact the millions of people employed in the industry in Middle East countries as well as in other countries across the globe.
Saudi Arabia’s oil industry accounts for approximately 70% of earnings from exports and approximately half of the country’s GDP. In Iraq, where oil sales fund nearly 90% of the state budget is expected to suffer from the economic contract during the COVID-19 pandemic, as much as 5%, as per the IMF prediction. Hence, Iraq is planning cuts in social benefits relied on by millions of government workers to tackle the COVID-19 induced economic crisis. Saudi Arabia will also likely to experience a delay in its mega-projects. The double shock of the COVID-19 pandemic and dropping oil prices can also be felt in countries such as Egypt, Jordan, and Lebanon, which rely heavily on their country’s citizen workers in oil-rich middle east countries.
As of 26th March 2020, according to Iraq’s Ministry of Health, there are 1820, cases confirmed of COVID-19 with a total of 87 fatalities. The World Health Organization (WHO) in coordination with the governmental counterparts in both the Government of Iraq (GOI) and Kurdistan Regional Government (KRG) are intensifying their outreach efforts to stop the spread of COVID-19. In order to save the economy crash, Iraq has sent a proposal to all international oil companies. In this proposal Iraq has asked them to reduce the budgets of developing oilfields by 30% as this crash in prices of oil is worsening the government revenues.
Also, the cost of storage is higher than the price of oil on the market which is making its producer sell the oil at any price which in turn is making the oil market condition worst. The cost of oil production is higher than the crude’s actual price in the market which is leading to the disruption of crude production in many OPEC countries. Several producers in the market have already suspended their oil production voluntarily and are laying off thousands of workers working across the industry. This lay off and suspended production will lead to the economic crisis in the middle east countries. If the middle east countries continue to go into an economic depression, millions of workers across the country will have to return to their residential countries. This scenario will impact the middle east countries along with other countries across the globe as it creates the problem of mass unemployment during the COVID-19 pandemic.
OMR Global recently published report on https://www.omrglobal.com/industry-reports/impact-of-covid-19-on-middle-east-countries
The Report Covers-
- Historical market growth estimation of the Middle East countries economy pre and post-COVID-19 pandemic
- Deviations in the Middle East countries economy growth rate due to COVID-19 pandemic
Verticals Affected Most
- Energy
- Food & Beverage
- Aviation
- Chemical
- Retail & E-commerce
- Travel and Tourism
- Others (Healthcare, Machinery, Gaming, IT & Telecom)
To learn more about this report request a free sample copy @ https://www.omrglobal.com/request-sample/impact-of-covid-19-on-middle-east-countries
Regional Analysis
- GCC Countries
- Turkey
- Israel
- Rest of Middle East
Company Profiled
- Abu Dhabi National Hotels (ADNH)
- Abu Dhabi National Oil Company (ADNOC)
- Arabia Holdings Ltd.
- Aramex PJSC
- Dubai Refreshment Co.
- Dubai Technology Partners
- Dubai World Trade Centre (DWTC)
- Emirates Group
- Etihad Airways
- Ferrari World Abu Dhabi
