THE EFFECT OF THE DOWNTURN IN OIL PRICES ON THE EXTERNAL SURPLUSES OFTHE GCC COUNTRIES

The paper examines the impact of the downturn in oil prices on the per formance of the external sectors of the members of the Gulf Co-operati on Council (GCC). The paper also developes and tests a simultaneous-eq uations model to examine the interaction between the economies of the GCC and the rest of the world. The analysis shows that the slump in oi l exports has reduced drastically the external surplus of the GCC and has resulted in structural shifts in the import and resource balance f unctions.