GCC economy expected to grow by 4.4% in 2022, GlobalData says

The sharp rise in oil and gas prices since the beginning of the Russia-Ukraine conflict in late February has been a boon to the GCC economies. Against this backdrop, GlobalData has revised its 2022 economic growth projections for GCC nations upwards to 4.4 per cent in 2022 from its earlier projection of 4.2 per cent in January 2022.

Lifting of COVID-19 restrictions, higher vaccination rates and increased mobility are expected to keep the global demand for oil and gas buoyed in the first half of 2022, GlobalData said in a report.

Meanwhile, the prices of crude oil and natural gas rose sharply since the beginning months of 2022, rising by 52.3 per cent and 107.3 per cent, respectively, on an annual basis, as of May 2, 2022.

GlobalData said that the robust demand along with a sharp rise in the hydrocarbon prices is expected to aid the economic growth of the GCC nations in 2022.

Arnab Nath, economic research analyst at GlobalData, said, “The GCC nations are projected to grow at their fastest pace in years on higher hydrocarbon prices. Among the six GCC nations, Saudi Arabia is projected to be the fastest growing with real GDP forecast at 5.1 per cent in 2022, followed by Qatar (4.1 per cent), Kuwait (4 per cent), the UAE (4 per cent), Bahrain (2.7 per cent) and Oman (2.7 per cent).”

The bullish sentiment for the six wealthy oil exporters is expected to sustain through the rest of 2022 with the GCC nations accounting for a quarter of the world exports of mineral fuels and mineral oils, Nath added.

Qatar holds 29 per cent of the natural gas reserves in the Middle East and 11.5 per cent of the world natural gas reserves, as of 2020.

Most European nations, which import natural gas from Russia are turning to Qatar as a replacement following the imposition of sanctions, which is expected to significantly boost Qatar’s revenue.

Qatar is also expected to host the FIFA 2022 World Cup due to which it has invested US$300bn in the infrastructure development. GlobalData forecasts the real GDP growth rate of Qatar at 4.1 per cent in 2022, higher compared to 2.6 per cent in 2021, the highest since 2016.

Saudi Arabia recorded its highest ever growth rate since 2011 with the real GDP rising by 9.6 per cent on an annual basis in the first quarter of 2022. The kingdom’s contribution of more than 8 per cent to the world oil exports is aided by higher oil prices.

Along with it, robust growth in the non-oil sector is expected to be the main economic growth drivers. GlobalData projects the Saudi Arabian economic growth to almost double from 2.6 per cent in 2021 to 5.1 per cent in 2022.

GlobalData revised up its 2022 growth forecasts for the UAE to 4 per cent in April 2022 from its earlier projection of 3.7 per cent. Kuwait, Oman and Bahrain are forecast to grow by 4 per cent, 2.7 per cent and 2.7 per cent, respectively, in 2022.