23 Apr GCC countries record steady growth & UAE growing fastest
According to a joint report released by Oxford economists in collaboration with Chartered Accountants, the UAE, fuelled by its investments is poised to record a 100% GDP growth in 2018. After having outshined all other GCC (Gulf Co-operation Council) countries in 2017, UAE (United Arab Emirates) is set to double its economic growth rate.
The report was released by a team of economists from Oxford, along with the Institute of Chartered Accountants of England Wales. This report puts UAE at the top of GCC countries, and states UAE will record an economics growth of 3.6% in 2018, up from 1.7% in the previous year. Rate of economic growth will surpass 3.6% in 2019.
This joint report seems to concur with the earlier report on GDP growth released by the International Monetary Fund. The IMF estimates that UAE will record a 3.4% GDP growth in 2018, as a result of progressionist policies being implemented across the country. By contrast, over GCC growth is slated to be 2.2% in 2018. The country recently shifted its focus on other sectors of the economy as well, after oil prices started to slump.
A Shift from Traditional Oil-Based Economy
UAE’s Minister of Economy, Sultan bin Saeed Al Mansouri is recently said to have been stated that the future prospects looked bright for UAE’s economy, inspite of rising regional and global economic challenges. As previously stated, this growth is on account of development of a vibrant non-oil sector. As GCC countries are shifting their focus away from oil and on other sectors of the economy, this is an interesting change to watch.
The GCC countries will record significant improvement in overall growth as well – from just 0.3% in 2017 to around 2.2% in 2018. The wider Middle East region is slated to grow at 3.2% in 2018, up from 2.3% in 2017.
Economic Insight: Q4-Middle East
“Economic Insight: Q4 Middle East” is a financial report generated to analyse expenditure on public welfare in the GCC countries, and the Middle Eastern region as a whole. The report states that the middle eastern region will grow steadily on account of three factors:
(i). UAE will impose VAT (Valule-Added Tax) from January 1, 2018. This will lead to the creation of a new revenue line, which will help ease the pressures of public expenditure.
(ii) Social Changes in Saudi Arabia – Women will now be allowed to drive. This move from the Saudi government will prove beneficial in attracting new investments in 2018.
(iii) Crude oil prices on a downward spiral forced the GCC countries to cut down public spending by 20% between 2015-17.
Effects of OPEC-Plus Production Cuts
OPEC-Plus production cuts are likely to go on, in 2018, and might be reversed by 2019. Due to this reason, the economic growth of the Middle eastern region and GCC countries as a whole will be around 4% in 2019.
As a result of the downward spiral of oil prices, oil GDP of GCC countries was at 2.3% contraction. Oil prices since then have shown some slow, but steady growth. From -2.3% in 2017, oil GDP of GCC countries is expected to grow at 1.7% in 2018, and around 2.5-2.7% in the post-2018 period. Growth of the non-oil sector is expected to pick up significant pace as well, GCC countries recorded a growth of 2.4% in 2017, with scope of it increasing to 3.7% in 2018, and 4.5% the year after that.
Tom Rogers, who is the economic advisor of ICAEW and the Associate Director of Oxford Economics states that though there will be improvements in the economic performance of the GCC countries, and middle eastern countries as a whole, political and security risks still remain alarmingly high, which could hinder economic growth and development of the region.
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