Gulf economies' 2022 gains are not about high oil alone
According to a new IMF update, the Gulf’s economies are the among the few to have achieved high growth rates, at around the 6.5 per cent mark this year. Economies such as China and India have seen significant growth rates, but the majority of countries now experience stagnation or growth rates of less than 1 per cent.
One may think that this has something to do with high oil prices and the gains Gulf economies make off them. However, this does not seem to be the case, since there are more variables at play, as evidenced from other oil-producing countries not generating anywhere near the same rapid growth rates by GCC nations this year.
The GCC has pursued certain policies that accelerated growth and helped diversify sources of national income. This is in addition to the overall stability these states offer, in itself another factor that attracts more domestic and foreign investments.
Getting flexible on growth priorities
Despite the substantial financial gains brought in by oil prices - which the IMF estimates to be worth $100 billion - the GCC states keep implementing flexible financial policies. A sizeable portion of this money has been used to fund investment projects in renewable energy, transportation, logistics, and infrastructure, as well as to support the growth of vital sectors such as financial services, tourism, and industrial, which in turn increased their contribution to the GDP and growth rates.
This is the approach that largely differs from previous economic policies that led to an increase in spending during the times of high oil prices. Therefore, the new approach must be adhered to, now that it resulted in the implementation of dozens of projects that will contribute considerably to further fast-track development.
While Covid and the lockdowns are still casting its shadow over some significant economies, the GCC has managed to overcome most of these repercussions, which helped with the lift-off felt by multiple sectors, including travel and tourism, to restore past growth rates, and in some cases exceed them.
This year, the GCC countries hosted multiple international conferences and events, which attracted millions of visitors and business professionals. These include the Expo 2020 Dubai, which lasted until the end of the first quarter of this year and the Qatar World Cup, and all these have proven the capability the GCC countries enjoy in the hosting of mega-events.
Confidence to do more on global stage
These successes mean one thing - the ability and confidence to attract more such that would dazzle the world and contribute greatly to reflecting the civilized image of the Gulf countries and the Arab world in general. Also, this year, the GCC states took advantage of additional oil revenues to strengthen their sovereign funds and enhance their domestic and external development roles.
This is a forward-looking approach that will not only contribute to increasing the size of these funds but bolster the economic power of the GCC states. In addition, the Gulf countries are blessed with stable security and political conditions, despite the regional and global turmoil.
This in itself is a success that they should be proud of. They strongly resisted all attempts to drag their feet into some conflicts and instead adopted a neutral position that earned them global respect and helped them pursue mediation policies. They were seen as a trustworthy mediator who eased tensions in conflict zones and mitigated the humanitarian crises.
This means that all of these developments that took place in 2022 will pave the way for the GCC countries to achieve greater economic diversification in 2023…