Dubai: Gulf Cooperation Council (GCC) economies are experiencing a golden age of growth and development supported by a positive cycle of reform, higher oil revenues, and falling interest rates, Majid Jafar, CEO of Crescent Petroleum, told an audience of business leaders, policymakers, and NGOs at the World Economic Forum in Davos.
"This is a golden age for the GCC as the region's stability, infrastructure building, and investment flows boost its global influence and its economy just as a new generation of well-educated, ambitious young people enters the workforce, promising to continue on this path," Jafar told the audience speaking on a panel at the World Economic Forum annual meeting in Davos, Switzerland. "We are enjoying the fruits of visionary leadership and decades of stability in the region," he added.
Jafar commented on the panel "Gulf Economies: All In", which discussed the economic outlook for GCC economies. Also speaking on the panel were Ahmed Jassim Al-Zaabi, Chairman of the Abu Dhabi Department of Economic Development, Khalid Al-Falih, Minister of Investment of Saudi Arabia, Ali Ahmed Al-Kuwari, Minister of Finance of Qatar, Sheikh Salman bin Khalifa Al Khalifa, Minister of Finance and National Economy of Bahrain, and Henadi Al-Saleh, Chairman of the Board of Agility.
He said that GCC economies are showing strong and sustained growth despite global uncertainties and regional turmoil, enjoying relative stability due to structural reforms, fiscal responsibility, and ambitious economic diversification plans.
While the oil and gas sector continue to make an important contribution to the region's economy, growing non-oil sectors and exports will drive growth in the GCC in 2024, Jafar said, supported mainly by continued investment in tourism and technology sectors. Investment into AI and other cutting-edge technology, combined with supporting laws and policies enhancing the business environment, has helped grow the digital economy to $38 billion in 2023 and is expected to reach more than $140 billion by 2031. The region's sovereign wealth funds currently manage $4 trillion, a third of the global total and an increase of 70% over the past five years.
Over the past decade, investment in infrastructure has yielded nuclear power generation in the UAE and new rail, pipeline, and road networks that are moving goods more efficiently and promise to make the region a nexus of global transport. Electric grid interconnections among GCC states have reduced electricity costs and increased reliability. Total contract awards in 2023 reached US$205 billion, Jafar said.
According to the IMF, GCC countries have attracted more FDI as a share of GDP than any other region. More than $26 billion in FDI poured into the region in 2022, more than 5% of GDP. This share has only grown further with regulatory reforms allowing 100 per cent foreign ownership of onshore companies and changes to Public-Private Partnerships (PPP) legislation to encourage more extensive private sector participation. In the past decade, GCC countries have become more central to the global FDI network, driven by the UAE, Saudi Arabia, and, to some extent, Kuwait.
Meanwhile, prominent examples of leadership of initiatives like COP28 and successful space mission programmes have allowed the GCC to capture the global imagination, providing regional leadership at a challenging time for the rest of the MENA region, Jafar said.
Jafar said that enabling, empowering, and enhancing the private sector will be critical to sustaining growth levels and creating more job opportunities for the young workforce. Accelerating innovation in financial regulation will also deepen capital markets, making the region a centre of development of blockchain and fintech.
Private sector job creation is also vital for ensuring young people's career development and enabling a productive economy. Recent efforts and mandates for Emiratisation and Saudisation have significantly increased the number of young citizens, particularly women, in private companies. And a new generation of ambitious, well-educated young men and women graduating from universities will play an important role in driving growth.
"These are important advantages, and as a region, we must also embrace new technologies while we invest in preparing for a new era of work and enable young people to reach their full potential," Jafar said.
The World Economic Forum annual meeting takes place on 16-20 January 2024 in Davos, Switzerland. The Annual Meeting convenes leaders from government, business, and civil society to address the state of the world and discuss priorities for the year ahead. It will provide a platform to engage in constructive, forward-looking dialogues and help find solutions through public-private cooperation.