The slide in the price of oil since November has a little further to go in early 2023 and, while we think prices will recover later in the year, hydrocarbon revenues in the Gulf will be lower than this year. Even so, most of the Gulf economies will run twin budget and current account surpluses. This should allow governments in Saudi Arabia, the UAE and Qatar to loosen fiscal policy. Indeed, the recent 2023 Saudi Budget pointed in this direction. While we still expect a sharp slowdown in growth in the Gulf next year, accommodative fiscal policy should help to cushion non-oil sectors in the region.
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