The Middle East’s biggest economy, Saudi Arabia may run out of financial assets within the next five years if the government maintains its current policies, warns the International Monetary Fund. The current cheap oil prices could lead economic downturn in the Gulf Coast. Their growth is expected to slow down to 3 1/4 this year. As the world’s largest oil producer, this slowdown is predicted to drain Saudi Arabia cash reserves within five years and Saudi Arabia Could Be Bankrupt by 2020 .
Probably in 2014, economist noted that China’s Demand for oil decreased this year and as the world 2nd largest oil consumer, this began a slow global drop in oil prices. Brazil, Russia and India also drop their oil consumption. At the same time United States and Canada doubled down on their own oil production to lower the use of imported oil and as there is low demand which results in low prices in global market.
The IMF also outlined the factor of inner regional conflicts. The conflicts have given rise to large numbers of displaced people and refugees, on a scale not seen since the early 1990s, according to the report. OPEC members Saudi Arabia, Iran, Iraq, Kuwait, Qatar, UAE, Algeria and Libya have all seen their revenues drop sharply as a result of a decline in oil prices.Saudi Arabia is currently facing a budget deficit for the first time since 2009. The crude price decline has strongly influenced the kingdom’s economy since oil sales account for about 80 percent of its revenues. It has prompted the government to cut spending, delay projects and sell bonds. The country’s net foreign assets fell by about $82 billion from January to August.