Gulf Co-operation Council (GCC) economies are expected to grow at a faster pace in 2022 as they continue to recover from the coronavirus pandemic on the back of higher oil prices and the expansion of their non-oil sector, Emirates NBD has said.
Gulf economies are forecast to grow 5.1 per cent on average this year, after rebounding to 2.3 percent in 2021 and following a 4.9 percent contraction the previous year when the pandemic began, Dubai’s biggest lender by assets said in the report, written by its chief economist and head of research Khatija Haque.
“The recovery in the GCC economies gained momentum in the second half of 2021 as travel restrictions eased, tourism rebounded and domestic demand strengthened,” the report said.
“With Brent oil forecast to average just under $70 per barrel in 2022 and GCC oil production expected to rise, we expect Qatar, Saudi Arabia and the UAE to post budget surpluses this year, while Oman and Bahrain are likely to see their budget deficits narrow further.”
Investment by government-related entities and sovereign wealth funds will also remain a source of growth in the GCC, even as direct budget spending may be contained.
The outlook for the GCC in 2022 remains “broadly constructive” despite uncertainty surrounding the Omicron variant, the report said.
“Even if the current wave of COVID-19 infections weighs on services sectors, particularly tourism and hospitality in the near term, we expect the impact on the broader economy will be limited,” Emirates NBD said.
The structural reforms carried out over the last couple of years, along with a much stronger fiscal position and recovering domestic demand, will support growth across Gulf countries this year and beyond, it said.
The Opec+ oil producers, led by Saudi Arabia and Russia, are also planning to increase output from July as global economies continue to recover from the pandemic pushing demand higher. The group agreed to add another 400,000 barrels of oil per day to the market from February.With Brent oil forecast to average just under $70 per barrel in 2022, Qatar is expected to post budget surplus this year.