A decrease in oil price in the major Arab oil-exporting countries leads to negative effects on the real GDP and its demand and supply components
The study reveals that the oil sector is still an important determinant of economic activity in the Arab oil-exporting countries and called for more diversification efforts
In line with its continuous efforts to support the decision-making process in the Arab countries, the Arab Monetary Fund (AMF) released a study on "Macro and sectoral implications of oil price decrease on oil-exporting countries".
The study assesses the effects of oil price decreases on all other real sectors than the oil sector for Arab net oil-exporting countries. Results show that a decline in oil price shock leads to negative effects on the real Gross Domestic Product (GDP) and its principal demand and supply components.
Consequently, the study calls for more efforts to build more resilience towards oil fluctuations by diversifying fiscal revenues. As diversification towards creating more non-oil revenues advances, this leads to gradually decoupling changes in public spending from changes in oil prices.
A full version of the study is available at this link