IMPACT OF OIL PRICE ON ECONOMIC GROWTH IN MENA COUNTRIES

Abstract

Oil plays a major role in the economy of a given country since it has significant impact on the growth of industry and commerce of the country and that has a direct effect on the economy of the country to an incredible extent. Therefore, this study is done to understand the impact of fluctuations and volatility of oil price on the economy of an oil producing country. The methods used is a quantitative study based on secondary data backed with some primary data from a group of five oil- producing companies from the "World Development Indicators" (WDI) and Bloomberg. The data was taken from a sample of seven oil-producing countries, mainly Jordan, Morocco, Saudi Arabia, Egypt, Tunisia, Kuwait and Oman. Based on the results from the data, it is evident that when the trade decreases, it leads to a decrease in the gross domestic product (GDP) for all the countries, and to a decrease in domestic credit in the private sector. A decline in trade means a decline in living standards and a lower GDP. In conclusion, fluctuating oil prices greatly influence the economy. Accordingly, a diverse economy will greatly benefit from the increase in the sector of exports such as the manufacturing and the export of goods and services boosting the GDP.