The region is increasingly recognizing that the world’s long-term shift away from fossil fuels is putting an end to the giving that oil provides.
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Poll: Growth is expected to slow rapidly in the Gulf region over the next year
“The economies of the six-member Gulf Cooperation Council will grow faster this year than previously thought thanks to abundant oil production,” a Archyde.com poll of economists showed, but “experts expected slower growth next year along with global demand.”
Crude oil prices, the main catalyst for Gulf economies, have jumped more than 35% this year, and despite expectations that they will remain high, the average price is likely to be below $100 a barrel next year.
The six Gulf Arab states, Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain and Oman, are running budget surpluses, some for the first time in a decade.
The poll predicted that during the period from July 6 to 20, overall growth in the six GCC economies would average 6.2% this year, up from the 5.9% projected in the April poll, and this rise would be the fastest since some time ago. Almost a decade.
But growth is expected to slow rapidly, to nearly half that pace at 3.8 in 2023, slightly higher than the previous survey.
“Global growth is still under pressure, there is a shock to commodity prices, which has raised fears of recession,” said Ensaf Al-Matrouk, assistant economist at the National Bank of Kuwait.
“The expansion or exacerbation of the war in Ukraine could push the global economy into recession, leading to a sharp drop in oil prices even if supply constraints persist, affecting regional growth and financial balances,” Al-Matrouk added.
She explained that the additional rise in the prices of goods other than energy, including food, could harm growth and raise concerns about regional economic security.
The region is increasingly recognizing that the world’s long-term shift away from fossil fuels is putting an end to the oil giveaway, adding impetus to spending more windfall profits on diversifying oil and gas-dependent economies.