GCC Countries Back on Path to Economic Growth after Contraction Due to the Pandemic
According to the latest issue of the World Bank Gulf Economic Update (GEU), headlined "COVID-19 Pandemic and the Road to Diversification," the Gulf Cooperation Council (GCC) countries are anticipated to recover to aggregate growth of 2.2 percent in 2021, following a year of economic suffering. This expansion is aided by the worldwide economic recovery, which is expected to be 5.6 percent, as well as the resurgence of global oil consumption and international oil prices. The COVID-19 pandemic, along with a drop in global oil demand and prices, has caused a health catastrophe and a commodities market shock in the GCC nations, resulting in a 4.8 percent GDP loss in 2020. However, fiscal deficits are expected to remain for the majority of the projection period. Kuwait, Bahrain, and Oman, the three nations with the highest deficits in 2020, are expected to stay in deficits from 2022 through 2023, although at lower ratios to GDP than during the economic crisis in 2020. According to the GEU, oil supply cuts and a four-year low average oil price of US$41.30 a barrel reduced the group's goods and services exports by 8.1 percent in real terms, resulting in a current account deficit of 2.9 percent of GDP in 2020. Non-oil GDP in all GCC nations is now proportionally higher than it was 10 or 20 years ago, but there is still more work to be done. Oil and gas exports, which account for more than 70% of total commodities exports in Kuwait, Qatar, Saudi Arabia, and Oman, and oil revenues, which account for more than 70% of total government revenues in Kuwait, Qatar, Oman, and Bahrain, are still vital.