Navigating Troubled Waters: Experts' Views on GCC Challenges for Socio-Economic Recovery in the Post-Covid-19 Period

Abstract

The GCC economies are being seriously hit by the negative impact of low oil prices and spread of Covid-19 pandemic. The restrained inflow of oil incomes deepens the budget deficit of the countries and makes government spending cuts inevitable in 2020 and, most probably, 2021. As in the past, the first areas to suffer from these cuts are likely to be social programs, the private sector and jobs for expats. Subsequently, the fall in remittances from the Gulf region will cause an additional stress for the social security of the Middle Eastern countries that traditionally provide the GCC states with the bulk of its work force. At the same time, the non-oil sectors suffering from the Coronavirus pandemic are looking for additional support. Subsequently, the budgets of the GCC countries are overloaded with emergency spending allocated to fight the negative economic consequences of the Covid-19 outbreak to support their economies. The steps taken by the states are ranging from acute budget cuts, partial curfew and freezing of spending on ambitious projects to the provision of additional financial support to the banking sector and business.