The GDP of the GCC will be in an accelerated position and will jump from 0.3% to 2.8% in 2018, and the more extensive the MiddleEast will rise from 3.2% to 1.4% according to a new report of the region.
According to the report of Economic Insight: Middle East Q4 2017” from ICAEW, a world leading professional membership organization, the GDP of GCC and the Middle East is moving towards a productive transition period.
The report published by Oxford Economics, ICAEW’s partner and economic forecaster, mentions that the pool of public finances now seems to be on a sustainable path in the most GCC economies due to these three main reasons of:
- The introduction of Value Added Tax,
- Societal changes in Saudi Arabia, where women have been now allowed to drive,
- Reduction of public spending cut by almost 20% from the 2015-2017 in the whole of GCC.
The other reason that has been related to the restoration of the economy is related to pressure on the household income with the expectation of the raising the VAT by 2.5% in 2018. Nevertheless, the IMF has said the introduction of VAT across the GCC region would rise by the GDP about 1.5%.
The Opec-plus oil production cuts are likely to be maintained through 2018 and reversed in 2019, GDP growth is expected to pick up to 4% in both in the GCC and the Middle East which will carry forward till 2019.
The report also highlighted that even though Oman is benefitting from the trade diversion which arises from the trade blockade of Qatar by the Gulf neighbors, the windfall would be modest and temporary “and does little to address the more fundamental challenges the economy faces.”
ICAEW economic advisor and associate director of Oxford Economics Tom Rogers said: “Economic growth prospects of the Middle East countries, particularly the GCC, are projected to improve in 2018 and the years after. But the political and security risks remain high and could limit or delay the recovery in the region.”
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