Baku, Azerbaijan, July 22
By Aygun Badalova - Trend:
Weak oil prices will keep the economic growth in the Gulf countries subdued, analysts at the British consulting company Capital Economics said in a report, obtained by Trend.
“Oil prices have been low for some time now, but the past month has brought further evidence that this new reality is starting to hit home in energy-exporting frontier markets,” analysts said.
Recently-released data showed that growth in Saudi Arabia’s economy slowed to 1.5 percent year over year in the first quarter, much weaker than the expansion of 3.4 percent recorded in 2015. The Kingdom’s non-oil private sector grew at its weakest pace in a quarter of a century.
At the same time, the report said, the Nigerian and Kazakh economies contracted by 0.4 percent year over year and 0.1 percent year over year respectively (following growth of 2.7 percent and 1.6 percent in 2015).
The picture is unlikely to get much better any time soon, according to the analysts.
“While we expect oil prices to edge up over the coming years, they are likely to remain far below the $100 per barrel-plus levels seen for much of the past decade. As a result, fiscal consolidation will have to continue in the Gulf countries for many years to come, keeping growth there subdued,” they said.
Oil prices fell June 21 as a glut of gasoline keeps weighing on prices.
US oil for September delivery settled down $1, or 2.2 percent, to $44.75 a barrel on the New York Mercantile Exchange, the Wall Street Journal reported.
Brent, the global benchmark, fell 97 cents, or 2.1 percent, to $46.2 a barrel on ICE Futures Europe, the lowest settlement since May 10. Both are down more than 12 percent from their highs of 2016, set in early June when they crested above $50 a barrel.