GCC Non-Oil Sectors Resilient Amid Extended Oil Production Cuts

KSA, 25 June, 2024 :  High-frequency data indicates robust growth in non-oil sectors across the GCC, countering the economic impact of extended oil production curbs.

Bahrain continues to diversify its economy, with non-oil growth reaching 3.4% last year, contributing nearly 84% to GDP, according to the latest Economic Insight report by ICAEW and Oxford Economics.

In Saudi Arabia, investments are flowing into key sectors supporting giga-projects like construction, manufacturing, and transportation. The sports and entertainment sectors are also gaining momentum, complementing the kingdom's transformation efforts.

Tourism remains a pivotal growth driver across the GCC, with strong rebound seen in visitor numbers throughout 2023 and into this year.

Despite a revised GCC growth forecast of 2.2% (down from 2.7% three months ago) due to prolonged Opec+ output cuts, non-energy sectors in Bahrain and Qatar show resilience.

Qatar's GDP growth projection for 2024 is 2.2%, expected to rise to 2.9% in 2025. Bahrain anticipates 3.1% growth this year, moderating to 1.4% in 2025.

While fiscal positions in Saudi Arabia, Bahrain, and Kuwait are expected to deteriorate with projected budget deficits, the GCC overall remains in surplus, supported by strong financial standings and favorable credit ratings.

Hanadi Khalife of ICAEW emphasized ongoing diversification and sustainability targets across the GCC despite geopolitical risks. Scott Livermore, ICAEW Economic Advisor, highlighted positive bilateral deals and investments in Qatar and Bahrain, contributing to economic resilience amid global economic slowdowns.

Inflation forecasts for 2024 in the GCC have been adjusted to 2.2%, with a further slowdown expected in 2025. Central banks in the GCC closely monitor US Federal Reserve policy rates, expected to see gradual reductions starting September 2024.

Source : www.zawya.com