As I have noted in previous columns, the Gulf economies have not significantly been affected by the steep decline in oil prices. So much so, even a full year after oil went downhill, the economies are still achieving good growth numbers.
And while the decline has affected general budgets, it has not impinged on domestic liquidity, limited as it is to some non-core expenditure. Actually, the reduction in state budgets comes as a positive move to reduce the load on them through removing some unnecessary burdens.
As for political events and the instability in the region, the Gulf countries have dealt with great wisdom. Despite attempts to disturb security in some Gulf states, these have failed due to security measures and thanks to the awareness of citizens, who are keen on their leaders, abide by the law and lay great store on their countries’ stability.
Also, attempts to drag GCC countries into regional conflicts have failed, which in turn provides a favourable environment for continued economic growth.
These conclusions were reinforced by a new poll conducted by Zogby Research Services that measures business confidence. Those based in the Gulf expressed full confidence in the economic growth trajectory, particularly those in the UAE, Saudi Arabia, Kuwait.
And despite the fall in oil revenues, the gross domestic product of the Gulf countries rose to $1.5 trillion last year, which puts them on par with the largest economies in the world. It further reinforces the Gulf states’ combined clout.
The data suggests the continuous and rapid growth of non-oil sectors, which compensated through higher contribution for the lower input from oil revenues.
The special measures to activate the GCC’s common market too have contributed to the revitalisation of intra-regional trade and the development of other productive sectors that can serve the bloc as a whole.
In the Zogby Research poll, Business executives have also given their assessment of the value the GCC can create by working as a single unit. The biggest support for this came from the UAE, where more than two-thirds of CEO respondents were in broad agreement about the value enhanced by a single economic bloc.
Since the business sector benefits much from being a cohesive economic entity, their views reflect the importance that must inevitably be assigned to any effort to deepen cooperation and coordination to complete the elements of the GCC common market. Some of the key provisions are still pending, such as the customs union and the unification of investment and economic systems laws.
Since most of the obstacles relate to certain routine and administrative procedures, there is special significance in completing these and to push forward with the Gulf economic union.
This calls for special efforts on the part of the GCC’s General Secretariat and member states to overcome obstacles through processes based on the due diligence and raising trust between the various departments. Past experience shows sentiments within some economic sectors that either do not match the reality of the situation or are exaggerated to a great extent.
As corporate executives and businesses discover the mutual benefits to be derived from a common market, the obstacles that still hinder a single Gulf economic activity can be expected to go.
This will open new horizons that should allow for higher growth rates and overcome the fluctuations in oil revenues. It will also ensure greater economic stability and bigger gains for the Gulf across a broader global landscape.
Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.