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Rise in tourism, oil output to lift Saudi economy by 7% in 2022, outpacing other GCC nations

Saudi Arabia‘s economy is expected to witness a 7 percent acceleration in 2022, driven by stronger oil output following OPEC+ production cuts and continued growth in non-oil sectors, according to the latest World Bank report.

The World Bank’s Gulf Economic Update (GEU), “Achieving Climate Change Pledges,” report highlights that growth in the kingdom’s economy will also be supported by stronger consumption, increased tourism, and higher domestic capital spending.  

The projected rate of growth in Saudi Arabia outpaces the the economies of other Gulf Cooperation Council (GCC) countries, which are projected to expand by 5.9 percent overall in 2022.

“As GCC countries commit to the net-zero objectives laid out in their pledges and strategies, it is important to restructure energy and water subsidies and address the GCC’s challenge of moving to a more sustainable growth model less hydrocarbon dependent and managing the transition to a global low-carbon economic environment that risk to see their oil revenues reduced in the next few decades,” Issam Abousleiman (below), the World Bank’s regional director for the GCC, said.

Economic outlook for the GCC countries: World Bank
Bahrain: Bahrain’s economy is expected to accelerate in 2022 to 3.5 percent, boosted by surging energy prices. Recovery in the non-oil economy will be driven by expansion in the transportation and communication sectors, as well as increased agriculture and fishing.

Kuwait: Economic growth in 2022 is expected to accelerate to 5.7 percent, due to higher oil output as OPEC+ cuts are phased out and domestic demand strengthens.
Oman: Growth in 2022 is projected to reach 5.6 percent, underpinned by more than 8 percent growth in the hydrocarbon sector, while the non-oil economy continues to grow by more than 2% as faster vaccine rollout strengthens domestic activity.

Qatar: Real GDP is estimated to rise in 2022 to 4.9 percent on the heels of boosted hydrocarbon exports, while growth in private consumption may be slightly lower, at 4.8%, driven by a potential dilution of World Cup proceeds and higher prices.
United Arab Emirates: Economic recovery is projected to continue in 2022, with growth anticipated to reach 4.7 percent driven by oil and non-oil sectors.
The economic recovery in the GCC is likely to continue in the medium-term, driven by the hydrocarbon and non-hydrocarbon sectors.

Economic rebound from the Covid pandemic
The latest issue of describes the GCC countries as rebounding robustly from the Covid-19 pandemic in the course of 2021 and at the beginning of 2022.

The report attributes the rebound to a broadly successful vaccination rollout across the GCC, the easing of pandemic restrictions, and developments in the hydrocarbon market.

As a result, fiscal deficits have markedly improved, with the GCC external balance reaching pre-pandemic levels in 2021 as energy prices and export earnings strengthened.

As major hydrocarbon exporters, GCC countries may also benefit from changes in the energy markets brought about by the war in Ukraine.

These countries may see strong fiscal and external surpluses, which could help spur consumer confidence and investments.

However, the war has also placed energy security at the top of the agenda of many major oil importers, thereby accelerating their plans for a transition to green growth.

The GEU contains a special chapter focusing on critical steps that need to be taken towards energy subsidies, fiscal consolidation, and the importance of getting prices right to bring about an environment that places the private sector at the forefront of green growth, according to the World Bank report.

The special chapter of the GEU discusses opportunities to restructure energy subsidies in the region, as well as opportunities that exist for the GCC countries to become renewable energy powerhouses by diversifying into green technologies.

This transition to an environment-friendly model will be a recurrent theme in future issues of the Gulf Economic Update, making this the first in a series that will focus on green growth in the region.

Source:https://www.arabianbusiness.com/politics-economics/rise-in-tourism-oil-output-to-lift-saudi-economy-by-7-in-2022-outpacing-other-gcc-nations-world-bank