The impact of Oil price changes on the Gulf Council Countries (GCC) Dissertation

The impact of Oil price changes on the Gulf Council Countries (GCC) stock markets - Dissertation Example The author has rightly presented that energy is one of the most important factors of global economy. A country, which has enough sources of energy, can be one of the richest countries of the world. At present oil is the primary and most used sources of energy in world. Gulf countries are the major sources of oil, so their economy is one of the strongest in the world. The changes of the world economy majorly depend on the changes of oil prices. When the oil price increases, then the manufacturers around the world has to incur more cost in the manufacturing process. The cost of transportation also increases. Because of the increment in the operating cost, the profit of the company decreases. A country’s economy mostly depends on the performance of the companies. When the performance of the company decreases that is the profit of the company decreases, then the economy of the country also get affected. The foreign investors also feel less attracted for the economy of the oil impo rting country. The investors feel that if they invest that amount of money elsewhere then they can generate more return as the efficiency of the oil importing countries have been decreased due to the oil price hike. However, it is also a fact that the present era is the era of globalization. In this era of globalization, the economy of one country has certain effect to the economy of other country. As the oil price hikes so, the country, which imports oil from some other country, found problem in manufacturing. They have the problem in the manufacturing of the products, which are the need of the oil exporting countries. (Aliyu, pp. 8-9). The product price will also be high. The inflation increases and the price of the goods and services increases. The value of the currency comes down for the oil importing countries. For the oil exporting countries the price of goods, which they have to import from any other country increases. Though they make huge profit by exporting oil to other co untries, they also have to pay more than the normal for the goods they import from the other countries. The oil price hike does not only increase inflation, but also it affects other macro economical factors like gross domestic product, unemployment rate of the country. As the productivity of the companies decrease due to the hike of oil prices, the gross domestic product of the country also decreases (OECD, pp.5-6). As the productivity of the companies decreases, the unemployment rate also increases. If the productivity of the company decreases and the unemployment rate increases, the economy would suffer huge blow. The capital inflow in the market would decrease. The stock market of the countries would have less capital flow and the market indices will be down, as it was in the case of the global recession of 2007-2010. In the era of globalization, when the stock market of one country depends on the performance of the performance of the stock market of some other country, then the stock market of the richest countries even get affected. This happens in case of the gulf Council Countries also. The gulf council countries are consisting of Qatar, Baharin, United Arab Emirates, Saudi Arabia, Oman and Kuwait. All are the countries from Middle East. The countries of the Middle East are one of the largest oil producing countries (International Monetary Fund, â€Å"The Impact of Higher Oil Prices on the Global Economy†). Though they get benefit from the price hike of oil, their stock market also get affect from the events. Objective of the Project The objective of the study is to examine the effect on the