This issue of the Gulf Economic Update includes a special section focused on GCC Achieving Climate change Pledges. The GCC countries rebounded robustly from the pandemic in 2021 and the beginning of 2022. Thanks to a successful vaccination roll-out, the GCC has been able to weather the COVID-19 storm and resume strong economic activity. Easing of pandemic restrictions, and positive developments in the hydrocarbon market drove strong recoveries in 2021 across the GCC. Fiscal deficits across the GCC markedly improved and the GCC external balance is estimated at pre-pandemic levels in 2021 as energy prices and export earnings strengthened.
GCC Countries Outlook
Bahrain: Bahrain’s economy is gradually emerging from the pandemic-caused recession with growth expected to reach 2.6% in 2021 and accelerate in 2022 to 3.5%, boosted by surging energy prices. Recovery in the non-oil economy will be driven by the expansion in the transportation and communication sectors as well as increased agriculture and fishing activity.
Kuwait: Kuwait’s real GDP growth in 2021 is estimated at 2.3%, a modest rebound given the based effect that the COVID-19 driven deep contraction of 8.9% in 2020 generated. Economic growth in 2022 is expected to accelerate to 5.7% due to higher oil output, as OPEC+ cuts are phased out, and as domestic demand strengthens.
Oman: Oman’s economy is recovering gradually from the dual impact of the pandemic and the collapse in oil prices with growth estimated to reach 2.1% in 2021. Growth in 2022 is projected to reach 5.6% underpinned by more than 8% growth in the hydrocarbon sector while non-oil economy continues to grow by more than 2% as fast vaccine rollout strengthens domestic activity.
Qatar: Economic recovery is well underway and despite temporary interruptions from COVID-19, real GDP grew by 3.0% in 2021. Real GDP is estimated to rise in 2022 to 4.9% on the heels of boosted hydrocarbon exports while growth in private consumption may be slightly below at 4.8%, driven by a potential dilution of World Cup proceeds and higher prices.
Saudi Arabia: The economy grew by 3.3% in 2021 driven by continued recovery path of the nonoil sector, which registered a 5.1% growth. Growth is expected to accelerate to 7% in 2022 driven by stronger oil output, following OPEC+ production cuts, and continued growth in non-oil sectors supported by stronger consumption, increased tourism, and higher domestic capital spending.
United Arab Emirates: Real GDP growth is estimated at 2.8% in 2021 with recovery aided by a successful vaccination program, and fiscal and monetary stimulus measures that helped the rebound of domestic consumption. Economic recovery is projected to continue in 2022 with growth anticipated to reach 4.7% driven by oil and non-oil sectors.