The possibility of GCC economies returning to faster growth is showing up in more ways – despite the repeated claims to the contrary put out by some external media outlets.
Early this month, the International Monetary Fund (IMF) issued its latest set of updates on the global economy and revised forecasts for the year. And what the IMF provided matched the optimistic views concerning the Gulf economies.
The institution raised its expectation of 2021 growth rates for the UAE and the GCC countries compared to forecasts it put out last October. As for the UAE, the GDP is expected to grow by 3.1 per cent this year, up from the earlier forecast for 2.6 per cent.
The Saudi GDP will possibly increase by 2.9 per cent, Bahrain’s by 3.3 per cent, Qatar by 2.4 per cent, Oman by 1.8 per cent and Kuwaiti by 0.7 per cent, each higher than the October projections, which made as COVID-19 related repercussions were still being felt intensely.
Vaccination push pays off
The Fund said the GCC countries have been successful in taking measures to contain the spread and lessen its economic repercussions. The Gulf countries are now at the forefront in adopting rapid, transparent and practical preventive measures, and lead the world in terms of COVID-19 vaccinations rates.
This may speed up growth rates referred to by the IMF, especially since most of the forecasts project an improvement in oil prices. A large part of the GCC economies’ decline last year resulted from the deterioration in oil revenues.
Some critics may say that the 2021 expected growth rates in developed countries, according to the IMF, is 5.1 per cent, with the EU’s at 4.4 per cent. But it must be pointed out that this issue is part of the action-and-reaction dynamic.
Over the past year, the economic decline in developed countries was double the Gulf’s recession. In Spain, growth rate dropped by 12.4 per cent and in the UK by 10.3 per cent, compared to 5.9 per cent and 4.1 per cent the UAE and Saudi Arabia. This means that it is natural for growth rates to rise in developed countries, given that they are measured by previous rates of decline.
On solid grounds
The same applies to the Gulf countries - but measuring the ratios shows the advantage enjoyed by the Gulf economies. As for the forecasts for emerging economies, they are expected to achieve higher growth rates and which would, in due course, lead to a recovery in commodity prices, especially oil.
The Fund expects the global economy to achieve 6 per cent growth, and overcoming much of the impact brought on by the pandemic. Vital sectors will return to some level of normalcy, including travel and tourism. But some growth hurdles are expected to continue into next year.
But their effect will be less severe and gradually disappear thanks to vaccinations and precautionary measures.
It is in this context that we should dismiss the often fabricated and instigated reports, some of which, unfortunately, come from reputed media outlets and led some investors to take wrong decisions. When evaluating economic conditions, it is best to be all objective.
The economic prospects in the Gulf appear sound, as evidenced by the large projects that will come online, especially in the field of renewable energy and infrastructure.
- Mohammed Al Asoomi is a specialist in energy and Gulf economic affairs.