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Can the Gulf economies withstand an oil price shock?

The drop in the oil price over the past two weeks has led to concerns that the Gulf States will have to scale back their recent spending plans. Admittedly, the current budget commitments are likely to push some of the Gulf’s governments into deficit next year. However, as long as Brent prices are above $70 per barrel, we think that the risks in the next two to three years are low.

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