Why oil-producing economies need to diversify

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18 September 2018

Why oil-producing economies need to diversify

Report summary

The oil price recovery above US$70/bbl is a relief for oil-producing economies of the Middle East and Africa. After cutting expenditures hard in 2015 and 2016, the price rally will improve fiscal balances greatly, some returning to surplus this year.  While immediate fiscal pressure is easing on oil-producing economies, the long-term challenges haven't gone away. Oil industries alone cannot support economic growth and government finances over the longer term. If oil economies remain as dependent on oil production for government revenue as they are today, there could be trouble ahead. Economic diversification can generate new sources of revenue. In this Insight, we assess the prospects for diversification in Saudi Arabia, Iran, Iraq, Nigeria, the UAE, Kuwait and Angola.  

Table of contents

  • Introduction
  • Steadying the ship: fiscal positions improve
    • Share the financial burden
  • Risks of not diversifying
  • Who can make a success of diversifying?
  • Conclusion

Tables and charts

This report includes 12 images and tables including:

  • Government hydrocarbon revenues
  • Government spending index
  • Oil supply surge curtailed after OPEC agreement
  • Fiscal breakevens have converged but will increase to 2022
  • Big improvement in fiscal balances in 2018
  • Oil revenue vs GDP
  • Demographics
  • Female participation rates
  • International bond issuance in US dollars
  • Financial reserve assets (inc. sovereign wealth funds)
  • Debt as % of government revenue
  • Key factors influencing diversification

What's included

This report contains:

  • Document

    Why oil-producing economies need to diversify

    PDF 1.26 MB