Taylor(2008) indicated that the magnitude of the effects on the economy will depend on the extent of the reduction in foreign capital flows from exports, with countries having the largest current account deficits standing to lose most.
Countries with a low balance of payment will eventually suffer from the depletion of foreign exchange reserves, with the protraction contributing to the necessity for an unfavorable restructuring process. As postulated by the World Bank (12) and Roubini (2009) the magnitude of the impact of the crisis on theMiddle Eastwas depended on the composition of their international trade and reliance on foreign capital in theGDPas indicated on appendix 5. Diversified economies experienced a growth slump of 2% during 2008-2009, with reduction in export of merchandise. Decline in tourism and related sectors were the most significant, reaching dropping by 5% in 2009.
According to the oil production capacity of countries in theMiddle Eastis expected to rise to 34% of the global oil supply by 2015, up from 29% in 2003. This increase is closely tied to the increasing demand for oil across the globe as well as the enhanced investment in infrastructure in the region. Improving political climate is also a factor to consider, with most of the countries achieving democratic rule, thereby enhancing the utility of the returns from oil exports.
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