An April 2017 report by the World Bank (WB) said that “growth in MENA is expected to rebound to 3.1% in 2018, following a sharp decline to 2% in 2017 from 4.3% in 2016,” adding, “GCC countries, oil exporters could see growth reach 3% in 2018, double their rate in 2017.”
Where is this growth coming from?
On the path away from oil
According to WB, efforts at providing regulatory policies, reform initiatives, and a surge in foreign investments are expected to put regional countries’ finances in balanced order.
Currently, the GCC, in particular Saudi and the UAE, is on the right track with its implementation of policies and reforms, according to WB.
The UAE and Saudi have embarked on a journey of non-dependence on oil, putting them on the path towards economic growth.
Are there any surprises in the future?
Oil prices volatile
Whether you think that oil prices are going up, or down, you are right.
Even for economists, researchers, and statisticians, it’s purely guesswork.
At $55 per barrel of oil in 2017, GDP in the UAE was at $407 billion. While in the Saudi the GDP was $646 billion.
What if oil prices reach $80 from a current $70 as some experts expect? Increased oil revenues will allow the government to boost their economy, increasing their GDP, hire and invest more. Much more.
With or without these huge expectations, the region is still in a growth pattern.
According to the same World Bank’s report: “The outlook of MENA remains positive, and the growth rebound is expected to hold firm over the next two years, reaching 3.3% in 2019 and 3.2% in 2020.”
However, the global financial institution warns that “geopolitical tensions, and the challenges posed by the forcible displacement of people, including refugees, and the rising level of debt in the region could cloud the positive outlook.”
According to the UNHCR, the current refugee crisis in Yemen registered more than 270,000 refugees and asylum seekers, and 2.4 million people are internally displaced inside Yemen.
The ongoing Syrian conflict is fuelling another refugee crisis since 2011, with over 6 million migrants seeking shelter in neighboring countries in the Middle East.
The World Bank added to its report: “A second phase of reforms is needed that should be transformative if the region is to reach its potential”
Are the UAE and Saudi undergoing major reforms?
UAE & Saudi Arabia are already working on evolving.
Saudi Vision 2030’s reform plan by Prince Mohammed bin Salman is designed to free the kingdom from dependence on oil exports.
Saudi Vision 2030 includes increasing non-oil government revenue from $44bn to 270bn and increasing foreign direct investment from 3.8% to the international level of 5.7% of GDP.
Dubai 2021 and Smart Dubai are generally recognized as world-class actions towards building strong economic pillars based on an easy flow of capital and attracting foreign investments.
Dubai 2021 addresses the urban environment and improving the living experience of the people of Dubai and its visitors.
Smart Dubai focuses on achieving a ‘Smart City’ using technologic advances to facilitate life in Dubai.