How the Gulf countries will manage windfall oil profits

In the northwest of Saudi Arabia, near the mouth of the Gulf of Aqaba, there is a small area of ​​bare desert. it is here that they want to build a city called Neom. It is expected that it will become a symbol of the country's aspirations for the future and the willingness to diversify its economy, now heavily dependent on oil. According to the plan, all the heavy manual labor in the city will be performed by robots, the beaches will be covered with marble chips, and an artificial moon made up of drones will illuminate the city. Another idea is to build the longest buildings in the world, a kind of recumbent skyscrapers, stretching over 160 km. According to some estimates, the construction of the city could cost the budget $500 billion.

When these plans were unveiled in 2017, funding them seemed impossible. But now, thanks to an influx of oil revenues, things could get off the ground. The recovery of the global economy after covid-19 and the fighting in Ukraine led to an increase in oil prices, which turned out to be in the hands of suppliers. Between January and June, the price of Brent oil rose from $80 to $120 per barrel (now back to $95). According to the IMF, in 2022 the oil revenues of exporters from the countries of the Middle East and Central Asia will exceed the forecast by $320 billion, which is equivalent to 7% of the total GDP of these countries. Over the next five years, additional revenue could reach $1.4 trillion.