GCC fiscal adjustment to be gradual: NBK

GCC governments are acting to deal with the impact of lower oil prices but the adjustment process will be slow and gradual, the National Bank of Kuwait (NBK) says in a report released today.

“The new low oil price environment has forced structural reform and adjustment on many GCC countries in order to deal with this new reality,” NBK says. “New taxes and revenues are being sought, and subsidy cuts have been enacted with more to come. Furthermore, all GCC countries are expected to post further deficits in 2016.”

NBK says that GCC will grow on average by 2.4 per cent a year in 2016 and 2017 in inflation-adjusted terms.

“ ..(W)e expect Qatar, Kuwait and the UAE to be the better performers, especially when considering non-oil GDP growth,” NBK says “Those countries happen to be the ones with more flexibility thanks to their vast financial resources.”

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