In a recent report, the World Bank expected the economies of the Gulf states to grow at a slower pace in 2023 compared to the previous year due to the decline in oil and gas revenues and the slowdown in global economic activity.
The economy of the Gulf countries is expected to grow at a rate of 2.5% in 2023 and 3.2% in 2024. This comes in comparison with the remarkable growth of the region’s GDP, which amounted to 7.3% in 2022, due to the strong increase in oil production in most of the countries. this year.
The reason for the weak performance is primarily due to the decline in the hydrocarbon gross domestic product, which is expected to contract by 1.3% in 2023 after the announcement of production cuts in OPEC + in April 2023 and the global economic slowdown, but the strong growth in sectors is not Oil, which is expected to reach 4.6% in 2023, will reduce inefficiencies in hydrocarbon activities, primarily due to private consumption, fixed investment and fiscal easing in response to relatively higher oil revenues in 2023.
The recent release of the new World Bank report on the latest economic developments in the Gulf region indicates that the structural reforms undertaken in the past few years have supported very modest growth rates this year. The improvement of the business climate and competitiveness, and general improvements in the participation of women in the labor force in the countries of the Gulf Cooperation Council, especially in Saudi Arabia, have achieved the desired returns, although more efforts must be made to achieve the desired diversity.
Prospects for the GCC countries:
the two seas:
Bahrain’s economic prospects depend on the future of the oil markets and the results of the acceleration of the implementation of the structural reforms agenda within the framework of the amended public finances balance program.
The growth rate is expected to decline to 2.7% in 2023, and will average 3.2% in 2024-2025 with continued fiscal consolidation. Growth in the hydrocarbons sector is expected to contract by 0.5% in 2023, while the non-hydrocarbon sectors will continue to expand by 3.5%, supported by recovery in the tourism and services sectors and the continuation of infrastructure projects.
Kuwait:
Economic growth is expected to slow to 1.3% in 2023 in response to the more cautious production approach of OPEC+ and slowing global economic activity. The oil sector is expected to contract by 2.2% in 2023 despite the recent construction of the Al-Zour refinery.
The non-oil sectors in Kuwait are expected to grow by 4.4% in 2023, primarily due to private consumption. The policy uncertainty resulting from the political stalemate is expected to undermine the implementation of new infrastructure projects.
Oman:
The Omani economy is expected to continue to grow, albeit at a slower pace, primarily driven by the acceleration of the implementation of structural reforms under Vision 2040. The overall growth rate is expected to slow to 1.5% in 2023 due to the decline in global demand.
Accordingly, the hydrocarbons sector is expected to contract by 3.3% due to the recent cuts in production carried out by OPEC +, and at the same time the non-oil economy is expected to continue the recovery path by achieving growth rates of 3.1% in 2023 and this will be supported Accelerating the provision of resources for infrastructure projects, increasing industrial capacities from renewable energy sources, and the tourism sector.
Qatar:
It is estimated that real GDP will decline to 3.3% in 2023 after the strong performance recorded in 2022, with the hydrocarbons sector expanding by 0.8%.
The North Field Expansion Project is expected to boost the hydrocarbons sector in the medium term once the field comes into commercial operation. Meanwhile, strong growth is expected this year in the non-hydrocarbon sectors of 4.3%, driven by private and public consumption.
Saudi Arabia:
Following a significant increase in GDP of 8.7% in 2022, economic growth is expected to slow to 2.2% in 2023. Oil sector GDP will decline by 2% due to Saudi Arabia’s commitment to production cuts agreed upon by OPEC+ .
With oil prices remaining at relatively high levels, accommodative fiscal policy and strong growth rates in private credit activities are expected to mitigate the downturn in the oil sector. As a result, the non-oil sectors are expected to witness growth rates of 4.7% in 2023.
The UAE:
Economic growth is expected to slow in 2023 compared to 2022 due to the decline in global economic activity, contraction in oil production, and tightening public finances. Accordingly, the real GDP is expected to grow by 2.8% in 2023 due to a decline in the growth of oil activity by 2.5%. At the same time, the strong growth of the non-oil sector by 4.8% will lead to an easing of the contraction in oil activities, due to the strength of domestic demand. , especially in the sectors of tourism, real estate, construction, transportation and manufacturing industries.
