DohaA number of economic experts in the Gulf region agreed with the estimates recently announced by the World Bank regarding growth in the six Gulf countries, considering that there are many factors that will help the Gulf economy return to its rise during the next two years.
A World Bank report – issued a few days ago – indicated that the economies of the Gulf Cooperation Council region would grow by 1% in 2023, before rising again to record 3.6% and 3.7% in 2024 and 2025, respectively.
The bank attributed the weak economic performance this year to the decline in oil sector activities, which is expected to contract by 3.9%, in the wake of successive OPEC+ production cuts, in addition to the global economic slowdown.
It is estimated that the GCC region’s economies will rise by 3.6% and 3.7% in 2024 and 2025, respectively!
Learn more about the latest economic developments in the region #Gulf In the latest edition of the World Bank report: pic.twitter.com/upor79whad
– World Bank (@AlbankAldawli) November 28, 2023
Reasons for the decline
In an interview with Al Jazeera Net, Saudi analyst and economic expert Suleiman Al-Assaf agrees with the outcome of the World Bank’s expectations regarding economic growth in the Gulf during the next two years, stressing that the decline during the current year is due to several reasons, the most important of which are:
- Oil production cuts.
- Interest rates rise dramatically.
- Uncertainty.
- The Chinese economy was affected by a decline in growth rates for the first time in 20 years.
Al-Assaf added that eliminating the reasons that led to the decline in 2023 will lead to recording better Gulf economic growth during the years 2024 and 2025, according to the following data:
- The rise in oil prices directly affects the Gulf economy positively.
- Oil prices rose from 10% to 15% during these two years.
- Low interest rates.
- Low inflation in the Western economy in general.
- Increased demand for oil by about 1 million to 1.2 million barrels per day.
- Increased internal demand.
Al-Assaf called on the Gulf countries – which have not implemented economic reforms – to work to accelerate those reforms and adopt economic governance.
He warned that the Bahraini economy may suffer during the coming period, in addition to the need for the Kuwaiti economy to correct the imbalances in the balance of payments.
The World Bank’s expectations for the growth rate of the Gulf countries’ economies in 2024/
1- Saudi Arabia: 4.1%
2- UAE: 3.70%
3- Bahrain: 3.3%
4- Oman: 2.70%
5- Kuwait: 2.60%
6- Qatar: 2.5% pic.twitter.com/V9HW6Dda8k– Abdullah AL-Khmais (@AZK_SA) November 24, 2023
Diversify sources of income
For his part, the researcher in economic and social affairs in Qatar, Mohammed Al-Kubaisi, agreed with Al-Assaf regarding the factors that will lead to the growth of the economies of the Gulf countries during the next two years.
Al-Kubaisi considered – in an interview with Al-Jazeera Net – that resorting to diversifying sources of income will greatly help in the growth of the Gulf economy, pointing out that Qatar’s trend – for example – is to develop the tourism sector coinciding with hosting the 2022 World Cup, and Saudi Arabia’s endeavor to host the tournament itself. The year 2034 confirms that the Gulf path is moving towards diversifying sources of income.
Al-Kubaisi stressed that the Gulf region enjoys many benefits that qualify its economies for growth, such as:
- Security stability that encourages internal and external investments.
- Oil components, as the Gulf region is considered among the richest regions in oil and natural gas resources.
- Developing infrastructure and providing modern transportation lines.
- Extreme flexibility in overcoming obstacles for external investors and the availability of foreign ownership areas in many Gulf countries.
The researcher in economic and social affairs added that there are many obstacles that stand in the way of comprehensive economic growth in the Gulf, stressing the need to find innovative solutions in the fields of agriculture in the Gulf, where the soil is desert and the lack of water, and to overcome dependence on fluctuations in global oil prices.
The Assistant Secretary-General for Political Affairs and Negotiations of the Gulf Cooperation Council, Abdulaziz Al-Awaishiq, expected the Gulf GDP to rise by the end of this year, 2023, to reach $2.3 trillion.
Al-Awaishiq explained – during his participation in the European-Gulf Business Forum – that this rise makes the Gulf economies the highest growing in the world, pointing out that “the Gulf Cooperation Council countries have a clear vision to diversify their economies, foremost of which is the development of non-oil sectors, such as clean energy projects, communications and tourism.”
Al-Awaisheq revealed huge projects in the field of alternative energy being implemented in Saudi Arabia, Oman, Qatar and the Emirates, most notably the “NEOM” green hydrogen plant in Saudi Arabia, which will produce 600 metric tons of carbon-free hydrogen by the end of 2023.
For his part, World Bank economist Khaled Al-Hamoud says, “The region has witnessed a noticeable improvement in the performance of non-oil sectors, despite the decline in oil production during most of 2023,” adding that “economic diversification efforts and development of non-oil sectors have contributed “To a large extent in creating job opportunities in various sectors and geographical regions within the Gulf Cooperation Council countries.”
