One of the main channels through which the Gulf countries are exposed to worries about the health of the global banking system in through energy markets, with the price of Brent crude falling by 13% so far this month. If prices were to stay at current levels for the remainder of the year, most Gulf countries would still be running budget and current account surpluses with the exception of the two smallest economies, Oman and Bahrain. Even so, lower hydrocarbon revenues could scupper plans to loosen fiscal policy to support non-hydrocarbon sectors, providing less of a buffer from the blow being delivered to GDP growth this year from oil production cuts.
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