Economy to feature high on GCC Summit agenda

Economy is highly anticipated to be given a priority on the agenda of the 37th GCC Summit in Manama, Bahrain, which kicks off today amid the economic challenges the member states have been facing due to the fall in oil prices.

Through the GCC history, the bloc has realized a multitude of economic and social achievements, but the sharp drops in crude prices on the world markets since 2014, have forced the members to adopt rationalization, or rather austerity measures to withstand the ensued repercussions. They have been hard at work developing measures to counter any potential deficit in their budgets, and avoid borrowing.

Approaches to achieve the aspired goals mainly focus on diversifying production and services, encouraging the private sector and supporting youth to have their own enterprises. Over the years, the GCC leaders have adopted several resolutions and taken many steps to push ahead the wheel of economy, industry, trade and development, to achieve pan-GGC integration.

A major element of economic cooperation among the GCC states has been the Unified Economic Agreement of 1981 that contributed a lot to the advanced stages of economic integration among GCC countries. In the meantime, the GCC has demonstrated eagerness to promote ties with trade and economic partners, through numerous framework agreements and trade and technical cooperation pacts.

In order to secure success for economic diversification, there is need for activating a host of macroeconomic policies with the aim of correcting the economic path, Director General of the Arab Planning Institute (API) Dr Bader Othman Malallah said.

He urged restructuring the economies of the member states, so that the private sector could become a major partner in production and employment; the government will no longer be the sole employer, consequently lessening the financial burden on state budget. More investments, both state and private, can be thus directed to the infrastructure, or the various sectors of production.

The challenge of economic diversification is closely related to the volume of government expenditure, which involves a huge public sector with low efficiency in some GCC countries, Malallah noted. He said there is dire need to reform, and apply governance, to the public sector, as well as developing the private sector to attract national labor.

Since the GCC was established, the member state have focused on building their capabilities with openness and a vision that set them among the advanced countries that mainly hold citizens’ rights and interests, he said.

This is the reason they concentrated most efforts on offering, and promoting, various services to people, besides building the human capital, and so they have come to achieve remarkable progress in education, health and social services, the APIU chief said. He referred to the GCC agreements, bilateral or multi-party ones, mainly aiming to enhance economic and social development.

But successful implementation usually needs changes in the structure of the economies of the Gulf countries, including legislative and long-term economic policies. Malallah, in the meantime, called for encouraging the creative and innovative youth, offering financial and institutional support to small and medium-sized enterprises (SMEs).

Amid the regional and international developments and escalating challenges, one has to commend the ‘wave of reform initiatives’ that has been worked out by the GCC members in the aftermath of the severe falls in oil prices, Kuwait Economic Society (KES) Secretary General Muhanad Al-Sane said.

The downtrend of oil prices over the past months has been the major challenge for the Gulf area, producing pressing need to diversify the sources of national income to lessen the impact on their deficits, Sane added. He underlined the necessity to focus investments in infrastructure, education, health and economy, and in the meantime, cut unnecessary spending.

Sane called for identifying the state’s priorities to meet housing demands till 2013 as a first phase, then till 2050 in a second one. He stressed the momentousness empowering youth, and luring foreign investors through incentive legislations and programs. —KUNA