GCC growth to gain pace to 4.2% in 2022

Mena region faces uneven recovery, amid rising inflation and debt levels

Oil exporting countries in the Middle East and North Africa (Mena) region, particularly GCC countries, will benefit from the recovery in global demand, higher oil prices, and wider vaccine coverage than most other countries, according to the latest Regional Economic Outlook of the International Monetary Fund (IMF).

The IMF sees that in the near term, GCC oil exporters have brighter economic outlook, while the growth is going to be uneven for the Mena region with the oil importers lagging.

For the Mena as a whole, the IMF has forecast an overall real GDP growth of 4.1 per cent for both 2021 and 2022.

The average growth outlook for GCC for 2021 is 2.5 per cent and for 2022 is 4.2 per cent.

Bullish forecast

The UAE’s real GDP is forecast to grow 2.2 per cent in 2021 and 3 per cent in 2022. Saudi Arabia leads the forecast with 2.8 per cent growth this year and 4.8 per cent in 2022.

Higher vaccination rates, rising oil prices, and easing of restrictions are expected to work in favour of GCC and other oil exporting countries in the region.

“Prospects for oil-exporting economies improved with higher oil prices and gradually declining production curbs. Vaccine rollouts and higher oil prices will also support confidence and activity in the non-oil sector, which is set to expand by 3.9 and 3.4 per cent in 2021 and 2022, respectively,” said Jihad Azour, Director of Middle East and Central Asia Department at the IMF.

All oil exporters in the Mena region are not equal in inflation outlook. While non-GCC inflation is projected to rise to 10.5 per cent in 2021 and moderate to 8.0 per cent in 2022, inflation in the GCC countries are forecast to peak at 2.8 per cent in 2021 and contracting to 2.4 per cent in 2022.