The six-member Gulf Cooperation Council (GCC) bloc enters 2023 from a position of strength despite at least a third of the globe’s population expected to experience recessions and nine out of 10 advanced economies will likely decelerate, according to the International Monetary Fund (IMF)
While 2022 was a ‘turbulent year’ marked by geopolitical tensions, Europe’s energy crisis, continued supply chain disruptions and financial market volatility, GCC proved resilient by recording the strongest expansion in almost a decade, underpinned by a double-digit increase in oil production and brisk non-oil sector activity as domestic demand rebounded from pandemic-related contractions in 2020.
The region continues to be driven by bumper hydrocarbon receipts, robust investment spending, macroprudential policies, active transformation programmes, solid logistic capabilities, robust local demand and increased intra-regional trade flows – especially with Saudi Arabia. Tourism and travel recovered strongly, supporting growth across a range of other services industry. The post-Covid recovery in GCC has been led by the non-oil private sector. This confidence (regional resiliency) is shared by the credit rating agencies reflected in upgrades for GCC sovereigns and prime corporates.
OPEC+ policy has weakened prospects for the oil sector, while sombre global conditions and tighter domestic financing costs will weigh on the non-oil economy. That said, GCC will again outperform many advanced, plus emerging-and-developing economies (excepting India and China) in GDP growth and moderating inflation, while recording strong ‘twin’ surpluses (fiscal and external), according to Bretton Woods Institutions.
Read the rest of the article by economist Moin Siddiqi in the upcoming issue of Technical Review Middle East.