Future of GCC economy promising despite COVID-19: ASI

By Rahul Vaimal, Associate Editor
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Saudi Arabia
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According to Aberdeen Standard Investments (ASI), a global asset manager, the long-term outlook for MENA-based investors looks remarkably optimistic due to digital acceleration and other signs of growth in non-oil industries due to the global pandemic.

COVID-19 is ravaging the economy around the world. For the GCC, the most recent International Monetary Fund (IMF) study forecasts a very grim end to 2020, with GDP projected to shrink by 7.6 percent for the year, even worse than the 2.7 percent contraction estimated in April.

ASI, however, claims that the strength and wealth of governments in the region, plus the move to accelerate diversity across economies, point to a much healthier long-term outlook, with some early signs beginning to emerge.

Edris Alrafi, Head of the Middle East & Africa, ASI said, “2020 will be remembered by most as the worst year in recent history for many reasons and the economic devastation should not be downplayed with the remainder of the year expected to be extremely difficult.

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Edris Alrafi, Head of Middle East & Africa, Aberdeen Standard Investments

“However, for investors, it is important to look further ahead, which is where we will see the positive effects of more digitally enhanced and diversified economies coming into play. This is certainly the case in the GCC where there are signs the pandemic has accelerated the economic diversity from oil to non-oil sectors,” he added

“This is a very positive signal for investors as they look to focus on long term growth opportunities, rather than be stifled by immediate challenges such as austerity measures via the swift and substantial government spending cuts,” he continued.

Some of this optimism is shared by the IMF, which forecasts a growth of 2.5 percent in 2021, spurred to some degree by the fact that most GCC stock markets have stabilized due to easing lockdown constraints and rising oil prices.

An election-free policy coupled with relatively low levels of government debt, which is 39 percent in Kuwait, 15 percent in Saudi Arabia and 13 percent in Abu Dhabi, are additional benefits for the GCC as a region in search for new opportunities.

Internet and eCommerce

A study by global research giant Frost & Sullivan highlights ‘megatrends’ which are expected to shape a more dynamic economic future for the GCC. It states that by 2030, the internet is projected to account for 5 percent of GDP (Gross Domestic Product), up from 4.1 percent in 2018, with all six states projected to introduce 5G broadband networks by the end of this year.

In line with the rush to e-commerce, a recent global survey by MasterCard shows a rise in online purchases, with 54 percent saying that the preference to eCommerce over in-store shopping is a trend that is here to stay.

Mr Alrafi also said that, “The dial has been cranked up on digitization across all sectors and we are already seeing new consumer behaviors fueled by the pandemic.”

“Regional governments embracing new business models and committing to fostering private enterprise in sectors slated for growth will help accelerate this further as will the continued investment in higher-quality infrastructure, renewable energy and digital systems. This should result in strong performances in future-focused sectors such as technology, telecoms and healthcare.

“With several trends breeding diversity in the economic make-up and mind-set within the GCC, there is increasing scope for the right conditions to future-proof growth in the next five to ten years. This could provide us with strong long-term markets helping us to recover from the devastation of 2020,” he added.


Aberdeen Standard Investments (ASI) is a global asset manager committed to producing long-term benefit for its clients. With over 1,000 investment professionals, the firm manages up to $669.6 billion worth of assets worldwide. The company is present in 80 countries globally.