Gulf Cooperation Council (GCC) economies will grow at a considerably slower clip in the current year due to the ongoing oil production cuts, with Saudi Arabia’s economy among the hardest hit, a Reuters poll of economists has predicted.
A poll of 24 economists taken July 8-22 has predicted that Saudi Arabia’s economy will expand 1.3% in the current year, down from 1.9% forecast in an April survey and 3.0% predicted in January.
However, the United Arab Emirates (UAE), is expected to post a better growth rate at 3.7% as it soon ramps up oil production and continues to focus on tourism. Kuwait is expected to remain in a recession this year while Qatar, Oman and Bahrain are seen growing 2.2%, 1.6% and 2.6%, respectively. Overall, GCC economies are expected to average 1.9% growth in 2024.
“Lower oil revenues are impacting non-oil growth. Saudi Arabia is in the process of an overhaul of Vision 2030 and adjusting investment spending…The impact on real GDP growth is clear – less investment means a more moderate growth outlook,” Ralf Wiegert, director of MENA economics at S&P Global Market Intelligence, has said.
The GCC outlook for 2025 is brighter, with the Saudi economy expected to expand 4.5% in 2025 while the UAE is expected to grow 4.2%. Further, the region is expected to continue seeing a modest inflation rate, with median forecasts ranging between 1.0% and 3.0% in 2024, including the lowest in Oman and the highest in Kuwait. Saudi Arabia is expected to post an inflation rate of 2.1% this year.
Last week, the International Monetary Fund (IMF) downgraded its growth forecast for the Saudi economy citing OPEC+ production cuits.
The IMF now sees 2024 growth clocking in at just 1.7%, compared to its earlier prediction of 2.6%. The IMF has projected Saudi Arabia GDP growth of 4.7% in 2025, a downward revision of 1.3 percentage points from April.
By Alex Kimani for Oilprice.com
Lead image (Credit: Reuters)
