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Recipe for gulf crisis: Pandemic, sinking oil industry and departing ex-pat

The Gulf Cooperation Council (GCC) has been witnessing slowdown for several years and the pandemic has exacerbated the scene.

By Ground report
New Update
Gulf Nations in Crisis After the Great Lockdown due to coronavirus Pandemic

Vijay Srinivas | Bengaluru

As the Gulf is hit by a double whammy of the coronavirus pandemic and the plummeting oil revenues, the future prospect of tens and thousands of expatriates in the region appear grim. The Gulf Cooperation Council (GCC) has been witnessing slowdown for several years and the pandemic has exacerbated the scene. 

The oil market which is one of the region’s key source of revenue has declined by almost 70 per cent, witnesses a historic 18-year low.

A gloomy gulf

Alongside the global growth of -3.0 per cent, an outcome that’s far worse than the 2008 financial crisis according to the IMF figures, the Gulf nations turned negative projections this year with -3.9 per cent showing that the region’s economy is sinking after “the Great Lockdown”.

Saudi Arabia’s growth projection is seen at -2.3 per cent while UAE at -3.5 per cent compared to 1.3 per cent last year. Qatar’s GDP forecast is at -4.3 per cent, Oman that recorded 0.5 per cent growth in 2019 is set to fall to -2.8 per cent this year. Kuwait considered better in comparison with others in the GCC projects growth of -1.1 per cent to 0.7 per cent last year.

The glum forecasts have made it clear that the GCC has come to exigency to rethink about its demographics, ease of doing business, dependence on ex-pats for labour, and policymaking.

Expats on the receiving end

Expatriates in the Gulf have almost shaped the region’s economy for in just over five decades, but they now have to bear the brunt of the pandemic. The International Labour Organisation (ILO) said that the expatriate exodus could be larger than what the region had faced following the 2008 financial crisis and 2015 oil price plunge.

According to numbers from the embassies, thousands of migrants predominantly from Asia have registered for repatriation. The homecoming remains a herculean task as debt for visas sponsorship and residency violation fines pop up as hurdles for the labourers. Some Gulf countries have offered to fund repatriation flights but home countries to where they belong hesitate as they do not have adequate facilities to quarantine their citizens.

India stands out to be an exception among those countries as it takes a major effort to rescue its stranded citizens from the Persian Gulf. Many reports indicate that the process could take a longer time as it appears to be on a much larger scale compared to the time when the country airlifted 1,70,000 Indians from the region after the outbreak of the Gulf War.

“I am kind of safe and secured as far as my job is concerned while my friends are at bay as they face a 20 per cent cut in their monthly salaries and some even laid-off from work”, Sai Kishan, a 23-year-old working professional who stays in Doha says. Kishan is also concerned about the looming crisis and has plans to return to India sooner than later.

An engineer who works at the Kuwait Oil Company says “there are massive layoffs expected particularly in the field of civil and constructions.” “A record 18 lakh may lose jobs and officials at grade one and grade seven levels at Kuwaiti businesses are the ones in deep trouble”, he adds.

Apart from the layoffs, cash crunch, and the crisis within the oil industry, ex-pats also face widespread xenophobic comments and the stigma around the Covid-19. Hayat al-Fahad, a popular Kuwaiti actress faces criticism after demanding the expulsion of migrants. “If their countries do not want them, why do we have to deal with them”, She says. SBC TV presenter Oqaily on a show criticizes Saudi businesses who retained ex-pats as “disloyal and shameless”. He said, “firms must get rid of the ex-pats and hire the more skilled Saudis”.

The 2021 rebound

The IMF, however, has issued a better projection in the region with GDP growth of 4.6 per cent in FY 20-21. Country-wise figures show that the UAE, Saudi are likely to grow at 3.3 and 2.9 per cent while Kuwait, Qatar, and Oman may grow at 3.4, 5.0, and 3.0 per cent respectively. The figures indicate that the impasse churned out due to the pandemic may come to halt and the GCC may return stronger but through a robust policymaking effort, regulating the labour market for the benefit of the GCC and the region alike.

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