Qatar and Saudi Arabia lead the countries with minimum GDP contraction
Analysts say that the six Gulf Cooperation Council countries will likely see less economic recovery as compared to earlier forecasts in a survey by Reuters.
Economists polled in early-mid January maintained that the hydrocarbon-dependent region’s economic fortunes will improve after the downturn last year due to the COVID-19 pandemic and the resulting decline in oil and gas prices.
However, the forecasts are not as optimistic as they once were towards the end of last year. Qatar and Saudi Arabia are expected to show most growth, while UAE, Kuwait and Oman’s GDP projections have been scaled back.
Median forecasts for Qatar expected 2.8% growth this year, a slight decrease from 3.0% expected three months ago. It is likely to have shrunk 3.5% in 2020, the smallest contraction in the Gulf and an improvement from 4.0% contraction forecast in October. It is expected to grow 3.5% in 2022.
Saudi Arabia, the region’s largest economy, is expected to see GDP growth of 2.8% this year, down from 3.1% expected three months ago, while the UAE, which has seen it’s COVID-19 daily cases triple recently, is expected to grow by 2.2%.
“The recovery in Saudi Arabia’s economy will continue over the course of this year. But with oil output being ramped up only gradually and fiscal policy to remain tight, the recovery is likely to be slower than in the other Gulf states,” Capital Economics said in a research note.
“Depending on how quickly vaccines are rolled out, the outlook is brighter for H2 2021, particularly with Expo 2020 set to start in October 2021,” Emirates NBD, Dubai’s biggest lender, said in a research note.
Kuwait was expected to grow 2.2%, and Oman and Bahrain, the region’s weakest economies, are expected to grow 2.1% and 2.5% this year respectively.
“It will take another 18 months before GDP in the Gulf Cooperation Council countries rises above its pre-crisis peak,” Oxford Economics said in a research note.
“The expected economic scarring from the dual shock of COVID-19 and low oil prices reflects high dependence on oil, limited scope for fiscal support, challenges of expat-dominated workforces, the key role of travel and tourism in the economy, and geopolitical risks.”