S04 TRME 2 2022 GCC overview_Layout 1 28/02/2022 06:07 Page 12
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Analysis
The GCC back on a stronger footing in 2022 and beyond Economist Moin Siddiqi analyses how elevated energy prices, higher oil production and robust momentum in non-oil sectors, buoyed by rapid vaccination measures, will see the Gulf Cooperation Council bloc growing at the fastest pace in a decade – behind only emerging Asia.
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The GCC’s construction industry is predicted to register an annual average growth of 3.9% between 2022 and 2025.
EGIONAL GOVERNMENTS SUCCEEDED in overcoming the ‘twin’ shocks – economic and societal consequences of Covid19 and plunging oil prices, which remain pivot in the region’s budget revenue structures. Unprecedented monetary and fiscal stimulus policies helped offset pandemic related losses – estimated by the World Bank at almost US$120bn. “This bounce back is based on excellent macroeconomic and pandemic management measures implemented in 2020 and 2021,” noted the World Bank. The Washingtonbased Institute of International Finance (IIF) projects the GCC’s aggregate GDP growth at 5.2% in
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2022 supported by higher oil (prices and production) leading to combined current account surplus rising from US$131bn in 2021 to US$182bn in 2022. Nonoil growth remains buoyed by rising regional market competition coupled with structural reforms across the GCC, which, last year led to increased private capital inflows estimated by IIF at US$142bn, particularly to Saudi Arabia and the UAE. The region’s 2022 headline GDP growth forecast from the International Monetary Fund (IMF) and World Bank stands at 4.2% and 4.7%, respectively. A combination of private consumption and fixed investment are fuelling the recovery. Higher energy prices bode well for business confidence
Technical Review Middle East - Issue Two 2022
and investment. The rise in oil output is also critical to boosting regional economic activity as OPEC+ eased production limits. Consequently, higher oil exports reduce fiscal and external imbalances and build up financial buffers, while providing opportunity to advance growth and diversification strategies. The sovereign credit profiles of most GCC countries will improve with better fiscal strength and growth upturn. The UAE boasts the highest sovereign credit rating within GCC.
Positive sentiment The manufacturing Purchasing Manager’s Index (barometer of business conditions), points to strong growth revival within non www.technicalreview.me
