GCC economic recovery to accelerate in 2022 on oil income and private sector growth

GCC economic recovery to accelerate in 2022 on oil income and private sector growth

The ongoing economic recovery of the Gulf region is expected to accelerate next year, with fiscal deficits narrowing, as oil income climbs and the number of Covid-19 infections fall amid wide-scale vaccination campaigns, according to the Institute of International Finance.

Growth in the regional countries is forecast to at an average 1.7 per cent this year and 4.2 per cent in 2022, the IIF said.

Hydrocarbon real gross domestic product of the region, which accounts for about a third of the world’s proven oil reserves, is projected at 5 per cent in 2022 “on the assumption that the Opec+ production cuts end by mid-2022", said Garbis Iradian, chief Mena economist and Samuel LaRussa, IIF’s senior research analyst.

“On the upside, faster vaccination rates and further progress in [implementation of economic] reforms could boost non-hydrocarbon growth in 2022.”

Economies in the GCC are bouncing back from Covid-19-induced challenges on the back of monetary and fiscal support provided to minimise the impact of the pandemic. The health crisis severely disrupted economic momentum last year and tipped the global economy into its worst recessions since the 1930s.