The International Monetary Fund is recommending to anyone who would care to listen, over in the gulf states, to “prudently treat the oil price decline as largely permanent, ” the Financial Times reported.
The IMF latest regional economic outlook is recommending some means for governments to make the sharp cuts in government spending hurt a little less, but cut they must, or their grandchildren would be roaming the deserts barefooted, much like their grandparents.
As you may know, especially if you own a motorized vehicle or know someone who does, oil prices have droped by a fat 55 percent since September, and will probably settle on average at $57 a barrel, even though there are analysts out there who say it could come back to as much as $72 a barrel before 2020.
The six Gulf oil exporters are expected to lose $300 billion, which amounts to 20 percent of their overall economy, FT notes, and, according to the IMF, the worst hit oil producers, Gulf and otherwise, will be Kuwait, Qatar, Iraq, Oman, Libya, and Saudi Arabia.
Couldn’t happen to nicer guys.
FT says all the Gulf states—possibly without Kuwait—will be running deficit budgets this year, in response to “rising social pressures and infrastructure development goals, ” while oil prices are tanking, so to speak.
In other words, they have to keep their people in the ridiculous luxury they’re used to, or heads will roll—those heads belonging to the nice kings and emirs of the desert.