World Bank Expects GCC Countries to Return to an Aggregate Growth
Business
Riyadh - Asharq Al-Awsat
Gulf Cooperation Council (GCC) economies are expected to return to an aggregate growth of 2.2 percent in 2021, according to the World Bank. In its latest issue of the Gulf Economic Update (GEU) titled “COVID-19 Pandemic and the Road to Diversification,” the World Bank indicated that this growth is maintained by the global economic recovery, projected at 5.6 percent and the revival of global oil demand and international oil prices. The COVID-19 pandemic and the decline in global oil demand and prices dealt the GCC countries a health crisis and a commodity market shock, causing a GDP contraction of 4.8 percent in 2020. Fiscal deficits are projected to persist for most over the forecast period. The three countries with the most significant deficits in 2020: Kuwait, Bahrain, and Oman, are projected to remain in deficit throughout 2021-23, but at narrower ratios to GDP in 2023 than during the economic downturn in 2020. According to the report, the oil supply cutbacks and the four-year-low average oil price of $41.30 per barrel slashed the group’s goods and services exports by 8.1 percent in real terms. They turned the current account surplus of 6.8 percent of GDP in 2019 into a deficit of 2.9 percent of GDP in 2020. “Non-oil GDP is proportionately larger now in all the GCC countries than it was 10 or 20 years ago, but much work remains to be done.” World Bank Regional Director of the GCC Countries Issam Abousleiman stated that while the GCC has done a lot in the last year to contain the effects of the pandemic on their economy, including procuring vaccinations early on, they must continue to reform their public-sector finances. “The region needs to strengthen their competition policies to harness the benefits of telecommunications and the digitalization of economic activity.” The report focuses on fiscal revenues and structural reforms, including strategic investments in digitalization and telecommunications, which can help enable more economic diversification. Promoting private sector development remains at the core of national and regional economic diversification efforts. In 2020, the GCC completed only two state-owned enterprise privatization transactions and two public-private partnership agreements. However, it was a challenging year for commerce and investment anywhere. According to the World Bank, advancing the telecommunications frontier is a strategic investment sector for diversification and post COVID-19 recovery that will serve the GCC well. Past investments in the sector accorded the GCC sizable benefits during the pandemic as quarantines, lockdowns, and restrictions forced public health surveillance, wholesale and retail commerce, public and private education, banking and financial services, and private and government office work onto digital channels. Strategic investment in advanced telecommunications technologies, including 5G, is underway in the GCC. But beyond capital spending on infrastructure, the telecommunications sector would benefit significantly from improvements in the legal, regulatory, and competition frameworks under which service providers operate. In a more detailed outlook of the GCC countries, the report found that firmer global oil demand will support Saudi Arabia’s economic recovery in 2021, with GDP growth expected to reach 2.4 percent in 2021. Medium-term growth is projected to average 3 percent over the forecast period. The UAE is expected to swing back to growth in 2021, estimated at 1.2 percent, before accelerating to 2.5 percent in 2022 and 2023, driven by government expenditures and the staging of Expo 2020 in October 2021. Bahrain will continue to rely on fiscal support measures in 2021 to overcome the economic contraction in 2020. GDP growth is expected to reach 3.3 percent in 2021 and remains simultaneously during the medium term. Meanwhile, oil exports will continue to drive Kuwait’s growth dynamics. Economic growth is forecast to rebound to a moderate 2.4 percent in 2021 before ramping to an average of 3.2 percent in 2022-23. As a sizable infrastructure investment program gains momentum, Oman’s economy is forecast to recover in 2021, albeit at a moderate 2.5 percent growth rate. Medium-term growth is projected to average 5.3 percent over the forecast period. Qatar is forecast to post a strong growth rebound with LNG demand in South and East Asia underpinning medium-term prospects. Qatar’s economy is projected to grow by 3 percent in 2021 before accelerating to 4.1 percent in 2022 and 4.5 percent in 2023.
from Asharq AL-awsat https://english.aawsat.com/home/article/3116236/world-bank-expects-gcc-countries-return-aggregate-growth
No comments:
Post a Comment