GCC economies to expand by 6.9% in 2022: World Bank

The economies of the GCC are projected to expand by 6.9 %in 2022 before moderating to 3.7% and 2.4% in 2023 and 2024, according to the new World Bank Gulf Economic Update (GEU).

Easing of pandemic restrictions, and positive developments in the hydrocarbon market drove strong recoveries in 2021 and 2022 across the GCC. Strong economic recovery and supply chain bottlenecks raised inflation in the GCC to an average rate of 2.1% in 2021 — up from 0.8% in 2020.

Supported by higher hydrocarbon prices, the GCC region is expected to register strong twin surpluses in 2022 and continue over the medium term. The regional fiscal balance is projected to register a surplus of 5.3% of GDP in 2022 —the first surplus since 2014 — while the external balance surplus is expected to reach 17.2% of GDP.

Titled "Green Growth Opportunities in the GCC," the GEU examines the development of the green growth sectors and looks at the potential opportunities this could provide for the GCC countries.

"There is an excellent and timely opportunity to diversify the economy further using a green growth strategy, and playing a leading role in the global transition to low-carbon economies," said Issam Abousleiman, World Bank Regional Director for the GCC. "The region could use the green growth transition to focus policies on developing green technologies and associated skilled labour that would reverse trends in productivity and enable the region to grow faster."

The GCC countries' total GDP is projected to be close to $2 trillion in 2022. If the GCC continued business as usual, their combined GDP would grow to an expected $6 trillion by 2050. However, if the GCC countries implemented a green growth strategy that would help and accelerate their economic diversification, GDP could have the potential to grow to over $13 trillion by 2050.

The special focus section of the report highlights the size of the addressable market for green growth, focusing on the major upstream and downstream sectors of the green economy, including, renewable energy, green buildings, sustainable transport, water management and waste management. In addition, it covers green finance as a critical enabler for new investments.

Focusing on green growth in the Gulf region is entirely in line with GCC vision documents that outline an image of the economy of the future that relies increasingly on the private sector playing a leading role in investment, job creation and value addition.

GCC country outlooks

Bahrain: Bahrain’s economic outlook hangs on oil market prospects and the government’s commitment to the reform agenda. Growth is expected to accelerate to 3.8% in 2022; mainly driven by the non-hydrocarbon sector which is expected to exceed 4% growth, supported by the full reopening of the economy and a stronger manufacturing sector.

Kuwait: Economic growth is forecast to accelerate in 2022 to 8.5% before moderating to 2.5% in 2023 and 2024, respectively. The non-oil sector is anticipated to continue expanding in 2023 following a 7.7% uptick in 2022. More robust demand will be translated into additional upward inflationary pressures, though monetary tightening and decreasing global food prices will moderate inflation in the medium term.

Oman: The economy is projected to continue its recovery and strengthen over the medium-term, driven by robust energy prices, expansion of oil and gas production, and wide-ranging structural reforms. GDP growth is forecast to reach 4.5% in 2022 before moderating to an average of 3.2% in 2023-24.

Qatar: Real GDP is estimated to rise to 4% in 2022 with exports (5.4%) and government consumption (4.8%) leading on the demand side. Growth in private consumption may be slightly below 4.5%, driven by higher interest rates and prices. Consumer prices are projected to increase on average 4.6% this year and to remain a full percentage point above levels recorded last year as far out as 2024.

Saudi Arabia: Growth is expected to accelerate to 8.3% in 2022 before moderating to 3.7% and 2.3% in 2023 and 2024, respectively. In spite of recent signals for a more cautious approach to OPEC+ planned production, the oil sector will remain the main driver behind this growth with output estimated to grow by 15.5% in 2022.

The budget balance should register a surplus of 6.8% of GDP in 2022—the first surplus in nine years—driven by higher oil revenues. Meanwhile, higher oil receipts are expected to more than compensate for the larger imports bill resulting in a significant external balance surplus of 18.8% of GDP in 2022.

UAE: Higher oil export volumes coupled with a revival in non-oil demand will support strong economic growth in 2022. This is further supported by a favourable business environment and world-class infrastructure. Real GDP is expected to grow by 5.9% in 2022 before moderating to 4.1% in 2023 as slower global demand dampens growth due to tightening financial conditions.

Higher oil receipts supplemented with a gradual non-oil recovery will bolster fiscal revenue resulting in a fiscal surplus to hover around 4.4% of GDP in 2022. Recent bilateral free trade agreements with Asian partners supported by strong oil exports will place the current account surplus at 11.2% of GDP in 2022. – TradeArabia News Service

Source: http://www.tradearabia.com/news/BANK_402616.html