Industrial investments by members of the Gulf Cooperation Council (GCC) are projected to hit a staggering $1 trillion by 2020, a new report projects.
After the GCC states finish their current industrial cities’ projects, the value of industrial investments will jump to $1trn by 2020 from $323 billion now, according to the report by the Federation of GCC Chambers.
The Gulf nations plan to increase their industrial investments to comprise 25 per cent of their gross domestic product by 2025 from ten per cent now, the report, published by Bahrain’s Al-Watan daily, says.
However, the report says that economic growth rebound remains the main challenge to the economies of the six-nation grouping. It indicates that the region’s governments may slash public spending, if oil prices remain between $50 and $60.
Furthermore, it warns that “higher consumer spending and speedy implementation of projects” may place additional inflationary pressures and challenge fiscal policies.
According to the annual report, domestic consumption and investments continue to grow as a result of higher government capital spending and pay hikes, in addition to more credit facilities by banks.
The mega infrastructure ventures are expected to continue unabated in countries like Saudi Arabia, Qatar and the United Arab Emirates, driven by further expansion in tourism, transport, construction, as well as wholesale and retail.