While the war launched by Russia against Ukraine escalated world energy prices, the crisis mostly benefited the Gulf countries. According to the IMF, Gulf countries will generate additional income of $1.3 trillion in the coming period, thanks to the increased energy prices due to the war. The rally in energy will strengthen the Gulf wealth funds and bring a current account surplus to Saudi Arabia. Turkey also expects investment from Gulf countries, which have a record current account surplus and record growth with additional oil revenues.
While energy prices rose to historical levels with the war in Ukraine, Arab countries in the Gulf were among the ones who benefited the most from this situation. While fears of recession increase due to the increase in energy prices in the global economy, especially in European countries, oil-rich monarchies in the Gulf are rapidly increasing their incomes.
According to the International Monetary Fund (IMF), energy-rich Middle Eastern countries will receive a total of $1.3 trillion in additional oil and gas revenues over the next 4 years, compared to pre-war expectations. The British Financial Times (FT) newspaper also stated that such a large source will increase the power of the Gulf countries’ wealth funds at a time when global asset prices are declining.
THE WORLD’S LARGEST WEALTH FUNDS ARE ALSO IN THE GULF
The Gulf region, where the world’s largest oil and gas producers are located, also has the world’s largest wealth funds. The FT pointed out that mutual funds including Saudi Arabia’s Public Investment Fund, Qatar’s Investment Authority, Abu Dhabi’s Investment Authority and Kuwait’s Investment Authority are among the world’s largest wealth funds.
Reminding that it has a size of 620 billion dollars from the Public Investment Fund headed by Crown Prince Mohammed bin Salman of Saudi Arabia, the FT said that this fund invested more than 7.5 billion dollars in US stocks including Amazon, PayPal and BlackRock in the second quarter of 2022 and evaluated the decline in stocks. conveyed.
THEY ARE INVESTING IN THE US FOREIGN COUNTRY
Reminding that the funds in the Gulf, during the global crisis in 2009 and the pandemic in 2020, evaluated the opportunities and invested in western companies in similar ways, FT emphasized that these funds have focused on sectors such as technology, health, life sciences and clean energy in recent years.
Stating that the Gulf countries aim to diversify their economies, expand into new sectors and earn income in this way, FT conveyed the words of Azur, “It is important for the Gulf countries to use the incoming money to invest in the future”.
Gulf economies, which have traditionally been highly dependent on energy revenues, face economic recession, budget deficits and reserve declines as energy prices fall.
SAUDIS WILL GROW RECORD AND GIVE RECORD BUDGET SURPLUS
Saudi Arabia, the world’s largest oil exporter, is expected to run a record budget surplus of 5.5 percent of national income this year, thanks to the rise in oil prices. This will be the first budget surplus of the Saudis, which have the largest economy in the Gulf, after 2013. The economic growth rate in the country is expected to reach the peak of 10 years with 7.6 percent.
Economic growth in the Gulf Cooperation Council region, which includes Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, Qatar and Oman, will rise to 6.4 percent this year, according to IMF forecasts. This rate was 2.7 percent in 2021.
EXPERIENCED EXCHANGE PROBLEMS, TURKEY ALSO EXPECTS MONEY FROM THE GULF
Turkey, which has a foreign exchange problem due to its high current account deficit and low reserves, is among the countries waiting for investment from the Gulf. Ankara, which has close relations with Qatar, has recently opened up its relations with the United Arab Emirates and Saudi Arabia for this purpose.
Recently, Abu Dhabi IHC bought 50 percent of Kalyon Energy, which carries out renewable energy generation activities, for 1.8 billion dirhams ($490 million).
The government, which drew a large amount of money from Russia for the Akkuyu investment before the election, expects foreign currency inflows from the Gulf countries.