World Bank expects Oman’s economic growth to reach 5.6 per cent in 2022, underpinned by more than 8 per cent growth in the hydrocarbon sector

Muscat – The economies of the Gulf Cooperation Council are projected to expand by 5.9 per cent overall in 2022, with this recovery likely to continue in the medium-term, driven by the hydrocarbon and non-hydrocarbon sectors, according to the World Bank.

The latest issue of the World Bank’s Gulf Economic Update, ‘Achieving Climate Change Pledges,’ described the six GCC economies as rebounding robustly from the COVID-19 pandemic in the course of 2021 and at the beginning of 2022.

The World Bank attributed the economic rebound to a broadly successful vaccination rollout across the GCC, the easing of pandemic restrictions, and developments in the hydrocarbon markets.

‘As a result, fiscal deficits have markedly improved, with the GCC external balance reaching pre-pandemic levels in 2021 as energy prices and export earnings strengthened,’ the Word Bank report said.

As major oil and gas exporters, GCC countries are also benefiting from changes in the energy markets brought about by the war in Ukraine. These countries may see strong fiscal and external surpluses, which could help spur consumer confidence and investments, the World Bank noted.

‘However, the war in Ukraine has also placed energy security at the top of the agenda of many major oil importers, thereby accelerating their plans for a transition to green growth,’ the bank added.

The World Bank’s Gulf Economic Update report also focuses on critical steps that need to be taken towards energy subsidies, fiscal consolidation, and the importance of getting prices right to bring about an environment that places the private sector at the forefront of green growth.

“As GCC countries commit to the net-zero objectives laid out in their pledges and strategies, it is important to restructure energy and water subsidies and address the GCC’s challenge of moving to a more sustainable growth model, less hydrocarbon dependent and managing the transition to a global low-carbon economic environment that risk to see their oil revenues reduced in the next few decades,” Issam Abousleiman, World Bank’s regional director for the GCC, said in a press statement.

The World Bank expects Oman’s economic growth to reach 5.6 per cent in 2022, underpinned by more than 8 per cent growth in the hydrocarbon sector. The bank said the sultanate’s non-oil economy will continue to grow by more than two per cent this year as faster vaccine rollout strengthens domestic activity.

Saudi Arabia’s growth is expected to accelerate to 7 per cent in 2022, driven by stronger oil output following OPEC+ production cuts and continued growth in non-oil sectors.

The UAE’s economic recovery is projected to continue in 2022, with growth anticipated to reach 4.7 per cent driven by oil and non-oil sectors, according to the World Bank.

The bank said Bahrain’s economy is expected to accelerate in 2022 to 3.5 per cent, boosted by surging energy prices. Recovery in the non-oil economy will be driven by expansion in the transportation and communication sectors, as well as increased agriculture and fishing.

Kuwait’s economic growth in 2022 is expected to reach 5.7 per cent, due to higher oil output as OPEC+ cuts are phased out and domestic demand strengthens.

Qatar’s real GDP, as per the World Bank, is estimated to rise in 2022 to 4.9 per cent on the heels of boosted hydrocarbon exports, while growth in private consumption may be slightly lower, at 4.8 per cent, driven by a potential dilution of World Cup proceeds and higher prices.