The Gulf states have by and large suffered a drop in their rankings in the 2018 Index of Economic Freedom, an adverse development that partly reflects the growing competition among economies to offer such freedoms.

The report ranks the UAE and Qatar in the “mostly free” category. Three others — namely Bahrain, Oman and Kuwait — are regarded as “moderately free”. And yet, Saudi Arabia is unfairly placed among the “mostly un-free category”.

The UAE is ranked the 10th in the world, undoubtedly the best in the region and among all Muslim countries. This translates into the UAE assuming a ranking better than most EU members and the US. Not surprisingly, the report acknowledges the liberal business environment prevailing in the UAE.

For its part, Qatar maintained its ranking of 29th place, behind Latvia but ahead of Japan.

Qatar receives high marks for its limited tax and fiscal burdens. A drawback for Qatar concerns external shocks as the economy relies heavily on the petroleum sector.

Bahrain is ranked 50th internationally, down six places. Traditionally, Bahrain was the leader among Arab countries in the index, in turn used in marketing the country’s economy to prospective international investors. Bahrain had conceded the position to the UAE ever since the 2017 report.

Bahrain gets exceptionally low marks for its fiscal health. The budgetary deficit in fiscal year 2017 amounted to $3 billion, or 9 per cent of GDP. In fact, this represents an improvement on 2016, when it experienced a shortage of $4 billion, or 12 per cent of GDP.

The report has Kuwait at the 81st ranking, down 17 notches, and thereby the second worst loss for any GCC country. Kuwait gets a low ranking on government integrity, clearly due to the constant differences between the cabinet and elected parliament. The report is worried about absence of progress on enhancing efficiency of the business law.

Oman lost 9 positions for a 93rd ranking. Much like Bahrain, the sultanate’s main shortcoming concerns the budgetary deficit. The projected deficit for fiscal year 2018 stands at $7.8 billion, or about 10 per cent of GDP. The study calls for an improvement in the business environment, partly via overcoming bureaucratic regulations.

Saudi Arabia conceded 34 positions to be 98th, the worst performance within the GCC. The kingdom must overcome the steep fiscal burden on the one hand and enhance laws relating to property and investments on the other. Looking forward, the Vision 2030 with its emphasis on local and foreign investments should help the kingdom’s ranking.

The latest report provides rankings for 180 economies. Six countries are not ranked, primarily Iraq, Yemen, Libya and Syria, ostensibly due to a lack of sufficient data.

The index relies on a number of factors such as property rights and freedom from corruption; regulatory efficiency, specifically business, labour and monetary freedom; limited government, essentially governmental spending and fiscal freedom; and open markets. Each variable carries 10 points on the 100-point maximum scale.

The Heritage Foundation and the “Wall Street Journal” publish the annual report, which is notable for placing an emphasis on the role private sector. The implementation of economic freedom principles is deemed essential to entice investments and create jobs.

There is a global appreciation of the role of economic freedom in unleashing initiatives and ideas. The Gulf countries have the potential to achieve outstanding results, as demonstrated in the case of the UAE.

The writer is a Member of Parliament in Bahrain.