News Middle East08 Dec 2019

GCC:Economic growth expected to improve in 2020-21

| 08 Dec 2019

Economic growth in the GCC states significantly weakened in 2019 due to muted oil prices and excess oil supply. The region's overall real GDP growth is estimated to drop to 0.8% in 2019 from 2% in 2018 before gradually gradually recovering in 2020-21, according to the World Bank's Gulf Economic Update released last week.

While most GCC countries retained strong external positions in 2019, the ongoing slowdown in China and the continued global trade war are hindering their efforts to boost non-oil exports. Meanwhile, resurgent geopolitical risks are raising risk perceptions, which could hurt prospects for investment.

The report outlines the economic outlook for individual GCC states, with GDP growth rates forecast as follows:

GCC member

2019 estimate

GDP growth 

2020 forecast

GDP growth 

2021 forecast

GDP growth 

Bahrain

2.0%

Average rate of 2.3% in 2020-21

Kuwait

0.4%

2.2%

2.0%

Oman

0.0%

3.7%

4.3%

Qatar

0.5%

1.5%

3.2%

Saudi Arabia

0.4%

1.0%

2.2%

UAE

1.8%

2.6%

3.0%

 

In more detail, the economic outlook for each of the six GCC states is:

Bahrain: Bahrain’s economy is expected to grow at a moderate rate of 2% in 2019 and average 2.3% over 2020-21, driven by the non-oil sector. Non-oil GDP growth will be driven by an increase in manufacturing output and higher levels of infrastructure spending.

Kuwait: Kuwait’s growth rate is expected to dip to 0.4% in 2019 before picking up to 2.2% in 2020, as the OPEC production cuts expire, and 2% in 2021, as the government increases spending on oil capacity enhancements and infrastructure to boost the non-oil sector.

Oman: Oman’s growth rate is projected to accelerate from an estimated 0% in 2019 to 3.7% in 2020 and 4.3% in 2021, supported by rising natural gas production. The potential boost from the diversification investment spending would continue supporting growth in the medium term.

Qatar: Qatar’s economy is projected to grow by a modest 0.5% in 2019 before accelerating to 1.5% in 2020 and 3.2% in 2021. Growth will be driven by a boost in gas production as the new Barzan Project starts operations as well as by the non-oil sector supported by the government’s investment program targeting infrastructure and real estate.

Saudi Arabia: GDP growth rate will likely slow to 0.4% in 2019 driven OPEC’s oil supply reduction drive, before rising to 1% in 2020 and 2.2% in 2021.

United Arab Emirates: GDP growth rate is projected to stabilise at 1.8% in 2019, before accelerating to 2.6% in 2020 and 3% by 2021, driven by government stimulus and a boost from hosting Expo 2020.


 

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