All six GCC economies will experience a “sharp” slowdown this year and over 2017, although the UAE and Qatar will outperform the others, according to new research.
From July 16, all persons arriving from the following third countries can enter Bulgaria without a 14-day quarantine and…57 Views | the publication reaches you by | Bulgarian Business Club
All GCC countries except Saudi Arabia will see growth bottom in 2016 amid public spending cuts, tightening liquidity and widespread investor uncertainty, said BMI Research in its latest briefing note.
However, from 2017, there is expected to be a notable divergence in growth across GCC states, with the UAE and Qatar outperforming and Saudi Arabia lagging behind.
The UAE will see a notable pick-up in growth next year, to 2.8 percent from the 2016 low of 2.2 percent, according to the report. In part, this is because the country is more diversified from oil than its GCC peers.
For Qatar, “huge financial reserves and still-strong revenues from the country’s gas sector” will ensure continued public sector spending ahead of the FIFA 2022 World Cup and ensure the country’s growth trajectory remains above that of its neighbours.
Qatar’s economic growth is forecast to rise from 3.1 percent this year to 3.6 percent in 2017, according to BMI.
At the other end of the scale, Saudi Arabia’s economic growth – projected to drop from an estimated 3.4 percent in 2015 to 1.3 percent by the end of this year – is expected to slow further to 1.0 percent in 2017. This year will mark the slowest growth rate for the Saudi economy since 2002, said BMI.
The three other GCC countries will see slow growth in 2017 – 3 percent for Bahrain, from an estimated 2.9 percent in 2016; 2.7 percent for Kuwait, from 1.7 percent this year, and 2.5 percent for Oman, from 2.3 percent this year.
The report said: “Nearly two years after the start of the collapse in global energy prices, the economic outlook for the six economies of the Gulf Cooperation Council (GCC) has clearly deteriorated.
“All six Gulf Cooperation Council economies will record a sharp slowdown this year and over 2017. Corporate sectors across the region are facing a much more challenging environment, amid waning ﬁscal support to the economy; rising ﬁnancing costs due to tightening liquidity conditions; higher fuel and utility costs; and the new strains on consumers’ purchasing power.
“While we do not expect any of the region’s economies to fall in recession this year, growth will slow considerably after half a decade of rapid expansion.”
The report added that the ﬁscal space available to the whole of the Middle East and North Africa (MENA) region’s net energy exporters has been “drastically” reduced. “Our estimates see the GCC posting an average budget deﬁcit of 11.0% of GDP for 2016 and 8.0% in 2017, with Saudi Arabia, Bahrain and Oman being by far the worst offenders,” it said.
Gulf states are expected to increasingly turn to external bond markets for financing, in order to rebalance deficits away from foreign exchange reserves and ease pressure on domestic banks.
BMI projects the OPEC oil price to average $43.50 per barrel in 2016 and $54 per barrel in 2017, according to the report.
In 2019, 35.5% of Bulgarians could not afford a one week annual holiday away from home, indicate Eurostat data. Compared to…33 Views | the publication reaches you by | Bulgarian Business Club
Do you have information you want to reach our readers?