News06 Feb 2017

GCC:Economic growth to pick up for most states

Source : MiddleEast | 06 Feb 2017

Growth is expected to improve this year across the GCC states, except in Oman and Bahrain, according to a global and regional economic outlook and sector analysis of Coface, which provides trade credit management solutions and risk information services worldwide. The GCC economies recorded a sharp slowdown in 2016 amidst public sector spending cuts, tightening liquidity, and investor uncertainty.

The Coface analysis shows that UAE growth will pick up in 2017 to reach 2.5% up from 2.3% in 2016 because the country is more diversified from oil than its neighbouring GCC states.

Saudi Arabia’s economic growth is expected to reach 1.8% in 2017 from 1.3% in 2016.

For Qatar, its huge financial reserves and still-strong revenues from its gas sector will ensure continued public sector spending ahead of the FIFA 2022 World Cup. This will keep the country’s growth trajectory relatively high in the region. Qatar’s economic growth is forecast to be 3.3% in 2017, up from 2.6% in 2016.

Kuwait’s economy had more than doubled from 2015 to 2016 going from 1.1% to 2.4%. In 2017, the growth rate is forecast at 2.6%.

Bahrain's economy will shrink to 1.7% in 2017 from 2% in 2016. Growth in Oman will also dip slightly again to be 1.7% in 2017 from 1.8% in 2016.

Mr Massimo Falcioni, CEO of Middle East Countries at Coface, said: “Oil prices are not expected to return to the previous high levels immediately; that is why public spending in the GCC will remain cautious. A wide range of factors that would impact regional and global consumption patterns calls for greater measures to protect business assets.”

Globally, growth weakened for the second consecutive year in 2016 to reach 2.5%, per Coface data. A slight improvement (+2.7%) is expected for 2017 especially with the upturn in activity for emerging economies (+4.1%, up from +3.7%) and the economic recoveries in Brazil and Russia which will offset China’s gradual economic deceleration. Activity in advanced economies will hold steady (+1.6%), with the slowdown in the UK being compensated for by the resilience of the eurozone and the slight improvement in US economic activities.