Economic Instability in the Gulf Region: Insights from a Dual Shock

Abstract

The emergence of the COVID-19 pandemic has caused financial markets to suffer historic losses during the first quarter of 2020, at levels unseen since the crisis of the futures markets in 1987. The pandemic affected global markets parallel to a simultaneous shock from the oil price war between Saudi Arabia and Russia. As the global health crisis worsened, governments worldwide were forced to take measures that led to economic lockdowns and significant economic disruptions. This research paper examines the extent to which the dual sh ock impacted the GCC economies due to the critical implications for the Gulf region because of its heavy reliance on oil. The core findings show that the dual shock caused significant disruption in the GCC stock exchanges, except for the case of Bahrain’s stock market, which emerged as relatively stable.