Growth in the GCC is expected at 6.2 percent this year, according to a Reuters poll of economists who revised up their forecast for economic growth of 5.9 percent from a similar poll in April.
But growth will slow next year to 3.8% across the GCC, economists estimate.
“An extension or worsening of the war in Ukraine could send the global economy into recession, pushing oil prices sharply downward even as oil supply remains tight, hurting regional growth and fiscal balances,” he said in Reuters Ensaf Al-Matrouk, assistant economist at NBK. . $100 oil is a boon for Middle Eastern oil exporters Triple-digit oil prices have accelerated economic growth in the Middle East’s major oil exporters, including the world’s largest crude exporter, Saudi Arabia. Oil revenues are soaring, fiscal balances are strong and growth – fueled by higher oil prices and higher oil production as OPEC+ reverses output cuts – is being revised upwards. In addition, inflation is not as high in the oil exporters of the Middle East as in the United States and Europe, which protects the Gulf economies to some extent from global inflationary pressures.
Saudi Arabia’s economy, for example, is poised for a stronger performance this year than previously expected amid high oil prices, the International Monetary Fund (IMF) said in April, revising its growth forecast to 7.6% for in 2022, up 2.8 percentage points from the previous estimate. For the first quarter alone, Saudi Arabia’s economy grew by 9.9% annually, the highest growth rate since 2011, the General Statistics Authority said, attributing the growth to “high growth in oil activities”, which increased by 20 .3% on an annual basis. In addition, Saudi Arabia recorded a budget surplus of $15.3 billion (57.491 billion Saudi riyals) in the first quarter, the finance ministry said in May. Oil revenue rose 58 percent to $49 billion (183.7 billion Saudi riyals) between January and March, when oil prices surged above $100 a barrel, according to Finance Ministry data. For the whole of 2022, Saudi Arabia’s economy is expected to grow by 7.6 percent, the fastest growth rate in more than a decade, according to a Reuters poll. This is in line with the IMF forecast from April. Slowdown in 2023 Next year, however, the growth rate in Saudi Arabia and the GCC is expected to halve, with growth of 3.8 percent for the GCC countries and 3.3 percent for Saudi Arabia, according to the Reuters poll. The IMF also forecasts slower growth in Saudi Arabia next year, at 3.6%. If fears of a recession in Europe or the US materialize, economic growth in the Middle East could be even slower, as the recession would limit growth in global oil demand or could even lead to lower consumption year-on-year. year. Gulf economies, dependent on oil revenues, will once again feel the sting of potentially lower demand and lower oil prices. That is why the IMF and other major economic forecasters and agencies have been advising Saudi Arabia and all Middle Eastern oil and gas exporters for years to accelerate the diversification of their economies and not rely on the cyclical nature of the oil windfall. “Fiscal policy should focus on managing higher earnings from oil revenues in a sustainable manner,” the IMF said last month of the Saudi economy. Much lower inflation in Saudi Arabia and other major oil exporters than the biggest jump in consumer prices in 40 years in the US and many European countries is now good for Middle Eastern economies, analysts say. In Saudi Arabia, headline inflation is set to accelerate in the second half of 2022 but will remain subdued at 2.8% on average in 2022 as an appreciating US dollar to which the Saudi riyal is pegged, petrol price caps and subsidies in wheat is helping to contain pressure from supply-side shocks, the IMF said in June. Despite slower growth expected next year, the sovereign outlook in the Middle East remains “improved,” according to Fitch Ratings’ latest outlook. The rating agency revised global sovereign credit conditions to “neutral” from “enhancing”, due to the impact of the Russian invasion of Ukraine and subsequent sanctions on geopolitical risk, trade capital flows and economic growth and inflation. “The Middle East and North Africa (MENA) is the only region to retain the improved industry outlook assigned at the end of 2021. Oil-exporting countries will record significantly stronger public finances and growth in 2022, although the economic picture will be much more difficult outside the Gulf Cooperation Council,” Fitch Ratings said late last month.
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