Moody's, the credit rating agency, expected the Arab Gulf countries to remain dependent on oil and gas production for at least the next ten years, with efforts to diversify their economies with limited success since the oil price shock in 2014 and 2015.
According to the credit rating agency, dependence on the oil sector will be the "main constraint on credit" for the six Gulf Cooperation Council countries. It added that if oil prices average $55 a barrel, it is expected that oil and gas production will remain the single largest contributor to the GDP of the GCC countries, the main source of government revenue, and thus the main driver of financial strength for at least the next decade.
Oil and gas contribute more than 20 percent of GDP, and at least 50 percent of government revenues for most of the Gulf Arab states. However, plans to launch new economic sectors often overlap, which creates competition among the GCC countries and limits the growth margin.
While Moody's expected the momentum to diversify resources to increase, it will be negatively affected by the decline in available resources to finance diversification projects in light of low oil prices and competition among the GCC countries.
Source (The New Arab Newspaper, Edited)
