How Are The Governments Handling The Politico-Economic Challenges?
Several governments in the region have become more authoritarian by controlling print and electronic media. Saudia Arabia, the UAE, Egypt, and others have strictly banned any news which contradicts their official statements on COVID-19 and its consequences on their economies including unemployment, etc.
The oil sector in these countries is assessing how much of the slump in demand fueled by coronavirus may become permanent.
There is a growing gap between the diversification economies and a faster-than-expected rate of switching from oil and gas to other fuel sources around the world. These economies have been making efforts to diversify their sources of income away from oil and gas. However, the rate of diversification has so fast enough.
According to Bloomberg’s report published on May 11, “Saudi Arabia announced a slew of austerity measures to cope with the impact of the coronavirus pandemic and an oil-price rout, tripling its value-added tax and cutting a cost-of-living allowance for government workers.”
What Should The Governments Do To handle The Economic Challenges?
The hard lessons from the markets around the globe should be clear to the governments in the region. The world is now demanding fossil fuels which are low-carbon energy instead of hydrocarbons like oil. The GCC countries need to rethink their existing economic models.
- Provide necessary training and conducive infrastructure to convert their youth into knowledge-based workers
- Diversify their economies into non-oil sectors
- Invest in the healthcare sector to cope with future epidemics
- Focus on industries that would be in high demand in the future
- Generate local food supply chain systems