The World Bank expects Gulf Cooperation Council (GCC) nations to reach an annual growth rate of 3.7% in 2024 and 3.8% in 2025, despite predicting that the global economy will slow down for a third consecutive year in 2024, in what could become the worst five years of growth of the past three decades.
The predictions were published in the World Bank’s Global Economic Prospects report. The document predicts that global economic growth will reach 2.4% in 2024, a significant slowing down from the 2.6% rate achieved in 2023 and a marked decline from the 3.1% average growth recorded in the decade ending in 2020.
Tight monetary policies, restrictive financial conditions, and feeble global trade and investment were the main causes of the economic slowing down.
MENA outlook
Regarding the Middle East and North Africa (MENA), the report has highlighted the contrast between the region’s 2023 and 2024 economic outlooks. Over the last year, increased uncertainty created by conflicts and the impact of oil production cuts, elevated inflation, and “anaemic” private sector activity in oil-importing economies caused the MENA’s growth rate to fall to 1.9% in 2023.
Nevertheless, the rebound in oil activity and the focalised impact of war led experts to revise their forecasts for the new year. As a result, MENA growth is expected to rise to 3.5% in 2024 and 2025.
Saudi Arabia and the UAE have also been given very positive economic outlooks. The countries are expected to reach growth rates of 4.1% and 3.7% in 2024 and 4.2% and 3.8% in 2025, respectively. In Saudi, the positive forecast has been driven by the expected expansion of the country’s oil output and exports and increased investment in non-oil activity linked to the government’s Saudi Vision 2030.
The report also predicted that the Kuwaiti economy will grow by 2.6% by the end of this year, rising to 2.7% in 2025, while Bahrain is expected to reach a growth rate of 3.3% in 2024 and 3.2% in the following year. With regard to Qatar, the World Bank predicted the country’s economy will grow by 2.5% in 2024 and 2.9% in 2025.
When it comes to oil importers as a whole, growth is expected to edge up to 3.2% this year and 3.7% in 2025, the World Bank said. The expansion of oil production as a result of relaxed production cuts in early 2024 is projected to contribute to faster growth in Algeria and Iraq,
“Recoveries in oil production are expected to support the improvement of fiscal balances in several GCC countries, while deficits are projected to widen in some non-GCC oil exporters as expenditures are likely to outpace revenues,” the World Bank said in the report.
“The 2020s have so far been a period of broken promises,” said Indermit S. Gill, Senior Vice President and Chief Economist at the World Bank, in the report’s foreword. “Governments worldwide have fallen short of the ‘unprecedented’ goals they promised to meet by 2030: to end poverty and hunger everywhere; to combat inequalities within and among countries;…and to ensure the lasting protection of the planet and its natural resources.
“But 2030 is still more than a half-decade away. That is long enough for emerging markets and developing economies to regain some of the lost ground—if their governments act now.”
In light of the negative global forecast, the report also offers recommendations that countries can implement to drive a “sustained investment boom”, drawing from the experience of 69 advanced and developing economies over 70 years.