GDP to grow at 6.1% this year in GCC

Business Wednesday 02/February/2022 17:35 PM
By: Times News Service
GDP to grow at 6.1% this year in GCC
Photo used for illustrative purpose only

Muscat: Gross domestic product (GDP) growth in the Gulf Cooperation Council (GCC) countries will see a surge and grow at 6.1 per cent in 2022, on the back of higher oil prices, increased oil production, and robust momentum in non-oil activity.

This will be the fastest pace of cyclical expansion since 2011 and is higher than other emerging markets (EM) peers, the MUFG Research released on Wednesday suggests.

“A supportive oil market, robust momentum in non-oil activity, stronger balance sheets, and easing geopolitical tensions are driving a compelling GCC story in 2022,” according to research author Ehsan Khoman, Head of MUFG’s EMEA Emerging Markets Research team.

“The GCC authorities’ unabated drive to realise their National Vision strategies of structural transformation away from hydrocarbons will also continue to gain traction,” he further added.

 “The GCC 2022 outlook is markedly skewed to the upside this year. The robust vaccination programme, ongoing reopenings and higher oil prices as well as production, is spurring a real GDP growth forward in the region, Ehsan Khoman explains.

“Following several years of having fiscal deficits, the GCC will rebuild its buffers in 2022. Higher government revenues and the rationalisation of expenditure in 2022 budgets will strengthen the countries’ balance sheets and offer the greater fiscal capacity to navigate towards a post-pandemic equilibrium,” he added.

This will lead to an aggregate GCC fiscal surplus in 2022 of $27 billion, the first since 2014.

The oil surge and austerity measures will support sovereign balance sheets, with the GCC’s financing need remaining limited at only $2.8 billion in 2022, and its Debt Capital Markets’ needs (DCM) at only $4.8 billion.

According to the research, the economic growth in the GCC will also outperform all EM peers in 2022 except Asia, with Saudi and the UAE leading this recovery, given their impressive bounce back in non-oil GDP, a rebound in their domestic demand, their higher investment levels in line with National Vision strategies, as well as being best-positioned to respond to the global economic recovery.