The Covid Response in the GCC: Making a Durable Economic Policy Agenda

Given the trauma of the Covid-19COVID pandemic, the GulfGulf states realized a major success in the containment of the virus, a roll-out of a vaccination campaign and choosing to continue a general shift toward economic reform that began after the decline in oil prices in late 2014. It has been a heavy order for state capacity, and the GCCGulf Cooperation Council (GCC) states have largely demonstrated that their control over population mobility and their tools for management of public health systems have demonstrated competent public service delivery. The reward for that success may be a sharp U-turn in the direction of oil prices by late 2021 that would help with fiscal spending buffers but will also tempt governments to limit their commitment to subsidy reform, taxation, and reduction of the public sector wage bill. However, the economic reform agenda underway in efforts to increase new forms of non-oil government revenue and to reduce government spending on subsidies and public sector wages seems to be held in place. In general terms, the CovidCOVID crisis also highlighted the limits of public sector-driven economic growth. The ability to direct support to workers and private sector businesses was comparatively weaker in the GulfGulf than in OECDOECD and advanced economies. This chapter highlights the surprising durability of the economic reform policies already underway when the twin crises of the oil price declines (in both late 2014 and again as a shock in spring 2020) and the Covid-19COVID pandemic.