Many oil-exporting economies are set for contraction in the coming year as the global slowdown is showing latent effects and oil prices continue to waver, putting related ETFs on pause for now.The International Monetary Fund cut its economic growth forecast for countries such as Saudi Arabia which are set to shrink amid the global slowdown. The IMF cut its forecasts in half, to 1.3% because of the downside risk from continuously low oil prices, according to International Business Times.
The Gulf states consist of the Middle East, North Africa, Afghanistan, and Pakistan and are subject to three major forces right now:
- The sharp drop in oil prices is shrinking revenues for oil exporters but also import costs for oil importers
- The contraction in global demand and trade is lowering export, tourism, and remittances receipts
- The tightening of international credit markets and lower investor appetite for risk are reducing asset prices and slowing down investment and capital inflows, as per the IMF
The front-month July light, sweet, crude contract on the New York Mercantile Exchange was trading 83 cents lower at $57.79 a barrel. Oil market fundamentals remain weak and global equity markets are supporting the hovering around the $60 per barrel mark, reports Nick Heath for Dow Jones NewsWires.
- WisdomTree Middle East Dividend (NASDAQ:GULF): down 3.2% year-to-date