Tuesday, March 5, 2024

Reuters poll: Rising oil prices support Gulf economies and concerns over inflation | Economy


The poll expects the overall average growth of the six Gulf Cooperation Council economies to reach 5.9% this year.

The Reuters poll of economists has concluded that the economic growth of the Gulf Cooperation Council countries will increase at a pace not seen in the last 10 years.

Crude prices – the main engine of the Gulf economies – continued to rise after Russia’s war on Ukraine last February, and this has given a significant boost to the economies of the oil and gas region.

According to a Reuters poll conducted from April 12 to 22, the overall growth of the six Gulf Cooperation Council economies is expected to average 5.9% this year, the fastest since 2012.

Khadeeja Huq, chief economist at the Emirates NBD, said: “The economies of the Gulf Cooperation Council (GCC) countries have a relatively strong start to 2022, and the hydrocarbon sector has benefited from increased oil production since the beginning of this year.”

He added, “The survey data for the first quarter of the year indicates strong expansion in the non-oil sector, strong growth in business activity and new jobs in the United Arab Emirates, Saudi Arabia and Qatar.”

  • As for Saudi Arabia – the region’s largest economy and the world’s leading crude oil exporter – respondents expect growth of 6.3% in 2022, an increase from 5.7% expected three months ago to 3.2% next year. If that happens, growth in 2022 will be much faster than in 2011, when the average oil price was $ 111 a barrel.
  • Expected growth in Kuwait will be 6.4% and in the UAE 5.6%, the fastest in about 10 years.
  • The projected growth for Qatar, Oman and Bahrain was 4%, the fastest in some years.
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The biggest risks are inflation and the global recession

But when asked by experts this year about two major risks facing the economies of the Gulf Cooperation Council, 10 of the 12 economists who answered the additional question said that high inflation and the recession in the world economy.

Inflation in most economies of the Gulf Cooperation Council (GCC) countries has risen in recent months due to rising food prices due to the Russian war on Ukraine.

Inflation in the GCC is expected to rise to more than 2% this year, compared to many other countries.

“As GCC countries import 85 percent of their food, the continuing upward pressure on global food prices could pose a challenge to policymakers in the region,” said Elgar Tomak, Citi’s regional economic head.

Experts expect uncertainty over the conflict in Ukraine to have a negative impact on the world economy, which is still recovering from the effects of the epidemic.

The International Monetary Fund last week downgraded its forecast for global growth to 2022, describing inflation as “clear and current risk”.

And the Gulf Cooperation Council countries – heavily dependent on energy for export earnings – are facing weak demand due to the recession, especially in China, one of the world’s largest oil and gas importers.

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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