Gulf Cooperation Council (GCC) economies are projected to grow at a much slower pace in 2023 than last year due to muted gains in crude prices and oil production cuts, a Reuters poll found.
This year, oil prices have spiked by almost 20%, soaring from March lows near $70 per barrel. An increase was largely driven by OPEC+’s decision to reduce oil output by about 1.16 million barrels per day and China's reopening.
Economists also anticipate a slower global demand for oil. It could adversely affect GCC economies.
Saudi Arabia, the world's largest oil producer, will bear the brunt. According to preliminary estimates, oil output will grow by 3.2% in the coming months. In 2024, the figure will hardly change. It may trigger a contraction in the country's GDP growth, which is expected to slow down significantly this year.
Most of the countries of the Persian Gulf are facing a double whammy - production cuts and a drop in oil prices. In 2023, the GDP of the UAE, the Middle East's second-largest economy, will increase by 3.7%, and in 2024 – by 4%. However, this is much less than the 7.6% rise recorded last year.
Qatar and Bahrain are forecast to expand by only 2.7%. At the same time, Oman's GDP will total 2.6% and Kuwait's GDP will be only 1.5%. Inflation in the GCC region in 2023 ranges from 2.1% to 3.3%. Analysts believe it will decline markedly in 2024.
What is more, top world economies are expected to show sluggish growth this year due to aggressive tightening cycles in many countries and persistently high inflation.
