GCC To Grow At Twice The Rate & Remain Unaffected By Global Economy Slowdown in 2023
Despite a slowdown in the regional economy after two exceptional years of growth, economists predict that the GCC economy will grow at twice the rate of the global economy next year. Real estate market demand will remain strong in the Gulf region in 2023, according to Oxford Economics.
In terms of GDP growth, the GCC economies ended 2022 on a high note, recording the highest growth rate in more than a decade. Maya Senussi, the senior economist at Oxford Economics, predicts growth to slow in 2023, yet remain positive despite the change, as opposed to many advanced and emerging markets.
According to the think-tank, the regional GDP growth will be over by seven percent this year and over two percent next year. There is a mild recession slipping into many advanced economies and emerging economies at the moment. Despite this, the region’s GDP growth in the GCC economy will still be higher than the average rate in the five years preceding the pandemic.
Oil Markets – The Key Growth Driver
In the GCC region, Oxford Economics predicts that non-oil sectors will again lead the recovery. Saudi Arabia is a country that economists are particularly optimistic about, because the National Investment Strategy supports investment and growth, and consumer spending indicators indicate a continued recovery. Senussi also pointed out that the UAE’s policies aimed at promoting growth in key sectors, part of the ‘we the UAE 2031’ vision, will also stimulate the economy.
Kuwait, Oman, and Bahrain’s economies will be weighed down by lower oil output over 2023, according to Capital Economics, which predicts less support for non-oil sectors than other Gulf states. The Saudi and UAE economies are expected to slow in 2023 as a result of strong growth this year.
Senussi expects that budget spending will support the non-oil sector in the GCC next year. The financial positions of regional budgets have improved substantially in 2022, as oil and gas revenues dominate regional budgets.”
GCC – A Hotspot For Investors
Following a number of listings on the regional bourses, particularly in the UAE and Saudi Arabia, Oxford Economics predicts IPOs to boost the regional equity market in UAE and Saudi Arabia.
A greater number of government assets will be offered for sale, and more companies will use the stock market as a financing source for expansion. Consequently, regional bourses will have fewer downside risks, and growth in capital markets will be reinforced. There is also the potential for further real estate market growth, especially in Dubai, where off-plan sales in Dubai have risen, which suggests that construction activity is on the rise.
There is still a great deal to be done to increase the non-oil GDP in all the GCC countries, although it has increased significantly in recent years. Despite the GCC’s efforts to contain the pandemic’s effects on their economy in the last year, including procuring vaccinations early on, reforming their public finance continues to be critical.
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