[ad_1]
Gross domestic product in the Gulf Cooperation Council is expected to grow by 6.7% this year, the fastest pace since 2011, supported by rising oil production, government revenue recycling for investment programmes, and rising household and business spending. To a small extent. However, the potential for a global recession to limit oil demand remains the main downside risk to this view.
Meanwhile, despite a sharp downward revision in global GDP growth against the backdrop of rising inflation and interest rates, the regional outlook is positive, with Middle East GDP growth currently forecast at 5.5% in 2022.
The latest Middle East Economic Insights report, commissioned by ICAEW and compiled by Oxford Economics, said this was a slight uptick from Oxford Economics’ forecast three months ago.
The positive outlook for the Middle East is underpinned by robust forecasts for activity in the GCC economies, according to the Q3 report.
Oil price contribution
While oil prices are expected to average $103.8 a barrel, down from an average of $113.5 a barrel in the second quarter, they still support public finances and are expected to help the GCC region’s overall budget surplus of 9.7% of GDP, which is This is the highest level since 2012.
This should push the debt-to-GDP ratio down, as much of the GCC retains ample fiscal space. With the exception of Bahrain, all GCC countries have fiscal breakeven prices (according to IMF estimates) below 80PB, suggesting that economic growth in the region will remain strong in the coming quarters.
Travel and Tourism Momentum
Travel and tourism activity also gathered momentum, shrugging off a strong regional currency pegged to the dollar and underpinning a recovery in non-oil sectors. Inbound tourism to the region is outpacing global trends, thanks in part to major international events in the region in 2022, including the upcoming FIFA World Cup in Qatar, which hopes to attract 1.5 million visitors.
Recent tourism statistics show that Qatar saw a 19% increase in tourist arrivals in the first half of the year compared to 2021 as a whole, thanks to a surge in tourist arrivals from other GCC countries, India, the US and the UK. Qatar is expected to surpass 2019’s (2.1 million) tourist arrivals this year, and other countries, especially the UAE, will also benefit. That said, despite the postponement of Expo 2020, the number of visitors to Dubai is still around 15% lower than in the first half of 2019.
economic diversification
ICAEW International Managing Director Mark Billington said: “While oil continues to provide a buffer to GCC economies, the looming possibility of a recession in the US and Europe reinforces the importance of accelerating economic diversification efforts. Fortunately, the region is currently gauged Non-oil indicators point to continued strength, even as inflation remains high.”
Scott Livermore, ICAEW economic adviser and chief economist and managing director of the Middle East at Oxford Economics, said: “The Middle East is under pressure from the global economy, but the broader outlook is challenging. The windfall from higher oil prices has made markets like Saudi Arabia Prosperity. However, as the demand outlook weakens, the OPEC+ alliance may cut production, and this growth will not be sustainable without more diversification. Continue to reinvest budget surpluses in public programs, increase non-oil trade and new fiscal Policies should help the GCC economies from the worst recession tensions.”
Inflation slowed in July in Kuwait, Oman and Qatar as food prices fell, but rose slightly in Bahrain and Saudi Arabia. Although official UAE inflation data has not been released since December 2021, ICAEW forecasts GCC inflation to average 3.1% this year, up from 2.3% in 2021, before falling back to 2.7% in 2023.
hiking bike
All central banks in the Gulf Cooperation Council region tightened monetary policy as the Federal Reserve continued its rate hike cycle to combat rising inflation. Given that currencies are pegged to the U.S. dollar, regional policy rates tend not to move too far from the U.S., which is expected to continue raising rates until early 2023. Given supportive energy and fiscal trends, higher borrowing costs will gradually weigh on demand and growth, with an even greater impact in 2023. arab trade news agency
[ad_2]
Source link