The Gulf Co-operation Council (GCC) economies are expected to grow at a faster pace in 2022, according to a new Reuters poll of economists who warned the risk to that outlook was skewed to the downside.
Last week, the crude oil prices climbed to their highest since 2014, mainly due to the escalating global political tensions involving major producers including the UAE and Russia, which could worsen already tight supplies, the report suggests.
The poll of 25 economists forecasts that all six economies in the GCC would grow faster this year than it was expected three months ago.
According to reports, Saudi Arabia was predicted to top the list with a growth of 5.7 percent, followed by Kuwait and UAE with 5.3 percent and 4.8 percent respectively. Economic growth in Qatar, Oman and Bahrain was expected to average between 3 percent – 4 percent for 2022.
“Despite the relatively tight fiscal policy, and some external headwinds, we expect the GCC economies to see faster growth in 2022 as they continue to build on the progress made last year. While the outlook for 2022 remains broadly constructive, there is still a high degree of uncertainty especially with regards to the evolution of the coronavirus pandemic.”
As the global economy deals with the prospect of persistent inflation, the region’s price outlook was modest but varied.
Inflation was expected to stay between 2 percent and 2.8 percent this year, with the lowest reading for the UAE, Saudi Arabia and Oman at 2 percent and the highest for Qatar at 2.8 percent.
Saudi Arabia, the world’s largest crude oil exporter, will see 5.7 percent economic growth this year. The UAE, a global trade hub and the GCC’s second-biggest economy was predicted to grow 4.8 percent this year, the fastest since 2015.
Dependency on energy prices has the attendant risk that any disruption in prices due to geopolitical tensions and a slowdown in the global economy could hurt the recovery.
Nine of 10 economists who answered an additional question said a decline in oil prices and new coronavirus variants were the biggest threats to GCC economic growth this year.
“The risk of oil price declines is still the biggest risk for the GCC region, while supply chain disruptions will continue to play a role and throw a wrench into global growth, but probably not so much for GCC economies,” said Mr. Ralf Wiegert, MENA economics team head at IHS Markit.