GCC Countries Unleashing Potential to Skyrocket Region’s GDP by $2.5 Trillion in a Decade
A recent study has unveiled the potential for accelerated economic growth in the GCC countries, projecting an addition of over $2.5 trillion to the region’s GDP over the next decade through enhancements in productivity performance.
By strategically elevating productivity from the current growth rate of 3.8% to 5.4% over the span of 10 years, the region can unlock significant economic growth and prosperity prospects. This transformative potential hinges on the strategic improvement of productivity performance, leveraging the Productivity Potential Index (PPI) to identify and address the weakest determinants of productivity within the GCC countries.
The study, titled ‘In search of productivity: The next $50 trillion global economy,’ conducted by the World Governments Summit in collaboration with Strategy& Middle East, underscores the importance of enhancing productivity performance. It emphasizes the utilization of the newly introduced PPI to pinpoint and rectify the weakest determinant of productivity, thereby propelling economic growth.
Chadi Moujaes, a partner with Strategy& part of the PwC network, highlights the significant impact of acting upon the findings of the study. He emphasizes that the potential boost to GCC economic growth, facilitated by a better understanding of productivity determinants, could substantially improve the lives of people in the region over the next decade.
Dima Sayess, partner and Ideation Center lead at Strategy&, emphasizes the importance of appropriate tools for measuring economic progress, particularly in the context of sustainability. She underscores the significance of criteria such as the environment, biodiversity, and social capital measurements in assessing economic progress, affirming that the newly introduced index fills an important gap in this regard.
According to the Gulf Investment Report 2023 by Century International Holdings, the GCC has the potential to emerge as a global economic powerhouse. The report suggests that with the adoption of a green growth strategy, the combined GDP of the six GCC countries could double to $13 trillion by 2050, up from a projected $6 trillion. Already touching the $2 trillion mark, the combined GDP of the GCC countries stands to benefit significantly from investments in green and sustainable projects, transforming the region into a global economic force.
The key findings of the Strategy& report underscore the significance of productivity as a fundamental measure of economic performance. Traditionally focused on goods and services production relative to input requirements, conventional measures often overlook critical aspects of the modern era, such as climate change, biodiversity loss, and social changes. The report introduces a forward-looking methodology that incorporates social capital, natural capital, and institutional quality alongside traditional measures.
The Productivity Potential Index, presented in the report, offers a comprehensive framework complemented by an online policy simulator. This tool enables users to assess how 25 countries compare across 19 criteria grouped into six categories. By estimating the potential productivity of countries given their endowments, the index provides valuable insights into opportunities for enhancing productivity and driving economic growth.
This forward-looking approach to productivity assessment is poised to revolutionize policy-making and economic strategy formulation in the GCC countries and beyond. By incorporating a broader range of criteria, including social and environmental factors, the Productivity Potential Index offers a holistic perspective on economic performance and growth potential. This comprehensive framework enables policymakers to identify areas of improvement and implement targeted interventions to enhance productivity and stimulate economic growth.
Furthermore, the introduction of the online policy simulator empowers policymakers with a dynamic tool for scenario analysis and decision-making. By simulating the impact of different policy interventions on productivity and economic outcomes, policymakers can make informed choices that maximize the potential for growth and prosperity. This interactive platform fosters greater collaboration between stakeholders and facilitates evidence-based policymaking in the pursuit of sustainable development objectives.
In addition to its implications for economic policy, the findings of the Strategy& report underscore the broader importance of sustainability and resilience in driving long-term prosperity. As the world grapples with the challenges of climate change, resource depletion, and social inequality, there is growing recognition of the need for a more holistic approach to economic development. By integrating environmental, social, and governance considerations into economic decision-making, countries can build more resilient and inclusive economies that benefit both present and future generations.
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