GCC states' 2024 budgets plan for more turbocharged growth

With the announcement of GCC member states’ 2024 budgets, we can identify many of the features shaping upcoming developments and growth trends that will influence the economies, the standard of living, and other factors in the region.

Despite the global economic and geopolitical turbulence caused by various conflicts, the prospects for the GCC countries remain very much in the positive. The region is set for another year of robust growth backed by strong finances, which reflect the overall economic stability. This can be clarified by analyzing the annual budget data from each GCC country.

More development on the way

The UAE's federal budget for 2024 includes spending of $17.4 billion and revenue of $17.9 billion, meaning a surplus of $.500 million. This highlights the robustness of the economy. While the budget only covers federal expenditure, incorporating local government budgets significantly increases the total spending and revenue projections, positioning the UAE's economy as the second largest in the Gulf and the Arab world. 
In Bahrain, the budget shows expenditure of $9.57 billion and revenue forecasts of $9.23 billion, indicating a deficit of $0.34 billion. This represents a positive development compared to the 2023 budget, as the projected deficit will drop from $0.52 billion.

In Saudi Arabia, the announced budget features a spending volume of $334 billion and revenue generation of $312.5 billion, resulting in a deficit of $21.5 billion. The budget allocates substantial funds to development programs and projects aimed at supporting sustainable growth, as highlighted by the Ministry of Finance. This focus on development is complemented by a noticeable increase in non-oil revenues, reflecting the success of the ongoing diversification policy.

In Oman, the annual budget shows a 2.6 per cent increase in spending to $30.2 billion and a 9.5 per cent rise in revenues to $28.5 billion, resulting in a modest deficit of $1.7 billion. This deficit represents 1.5 per cent of GDP, thus providing room for further development projects.

Qatar's annual budget has seen a 1 per cent increase in spending, reaching $53.6 billion, while revenues stand at $53.9 billion, resulting in a surplus of $0.3 billion. Despite an 11.4 per cent decline in revenues, the budget supports continued growth and the implementation of numerous projects, driven by increased public spending.

In Kuwait, whose economy ranks third in the Gulf, has experienced a 6.6 per cent decrease in spending this year, down to $79.9 billion compared to 2023. Revenues have also decreased by 2.8 per cent, totaling $61.6 billion, resulting in a deficit of $18.3 billion.

Overall, the Gulf budgets for the current year total $524.64 billion in spending against $483.62 billion in revenue, creating a deficit of $41 billion. There is strong potential to significantly reduce this deficit or even achieve a surplus.

Pegged to $60 a barrel

This optimism is based on the fact that most GCC countries have estimated the average price of oil at $60 per barrel.

In contrast, the US Energy Information Administration projects an average oil price of $84 per barrel for the current year, similar to last year’s unexpected rise. In 2023, it was noted that Gulf budgets were based on an average oil price of $55 per barrel, but the actual average reached $83 per barrel. This discrepancy led to a reduction in deficits for some GCC countries and surpluses for others.

As a result, GCC economies are expected to experience another year of growth, projected to range between 2.5 per cent and 4 per cent. This growth is likely to support the implementation of additional development projects, promote diversification of income sources—particularly non-oil—and maintain high living standards.

These factors will contribute to enhanced stability and sustainable economic growth across the GCC countries.