Workshop mulls GCC response to oil price fall

GCC economies are well prepared to handle falling global oil prices compared to the previous decline markets witnessed in 1984 and 2010, energy experts told a workshop here Tuesday.

Speaking at Enriching the Middle East's Economic Future Conference, participants said GCC is not dealing with lower oil prices for the first time. The region has seen price volatility in the past too. However, this time GCC is ready for the challenge.

Improved global competitiveness through legislative and market reforms, favourable environment to attract foreign investments and diversification of economies away from traditional revenue sectors of oil and gas to tourism, education, sports have made GCC much stronger, experts said.

The workshop discussed GCC's response to lower prices, the reasons for the change in supply and demand, the impact of shale gas production in the US, OPEC production quotas.

Some participants said oil price stability is vital since oil revenue comprises 40 to 60 per cent of region's Gross Domestic Product (GDP) whereas in US it accounts only 6 per cent and most companies there are listed on the stock markets.

Other experts were upbeat on the region's future prospects. They cited growth indicators such as infrastructure development, economic diversification, maturing financial centres, stock exchange upgrades, transparency and improved governance and human resources.

Others mentioned the growth of sovereign wealth funds that are vital in absorbing tremors of falling oil prices and increased regional economic co-operation.