OPEC+ cut its oil production quotas by 2mn bpd in November and strong compliance with the agreement will hit GDP growth in the Gulf economies harder than other members of the group. The result is that the region is now set to endure a sharper economic slowdown over the coming quarters than we had previously anticipated. That said, oil prices will remain elevated and the Gulf countries should all continue to run large twin budget and current account surpluses. Fiscal policy is likely to be kept loose, supporting non-oil sectors and cushioning the blow to GDP growth from lower oil output.
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