Japan's Mitsubishi UFJ Financial Group expected that the six Gulf Cooperation Council countries will witness a major recession this year, with real gross domestic product generally decreasing to minus 3.7%, compared to a previous growth of 2.9%.
The bank said in a research note today, Monday, that the new forecast takes into account oil production cuts, the impact of the emerging Corona virus on non-oil economies in the region, and the stimulus provided by the governments of the Gulf Cooperation Council.
The bank estimates that the drop in oil prices costs the six-nation council about $ 72 billion in lost oil export revenues in general for every drop of ten dollars a barrel.
He predicted in general that the financing needs of the Gulf Cooperation Council countries will reach $ 208 billion this year, assuming the average price of Brent at $ 43 a barrel.
He said that the countries of the Gulf Cooperation Council region will face difficulties in light of two shocks that tend to fall heavily, the shock of the devastation of demand caused by Covid-19, and the shock of the oil price collapse.
"The Gulf Cooperation Council region has faced setbacks and shocks for many decades, but the prospects in the short term rarely deteriorate very significantly," he added.
Oil prices fell on Monday due to indications that oil stocks are filling rapidly, raising concerns that production cuts agreed by global producers earlier this month will not fully compensate for the collapse in demand caused by the Corona pandemic.
And Brent crude fell 1.08 dollars, or 5%, to 20.36 dollars a barrel in morning trading today, Monday.