GoDubai
  
  
  
  
Citylife > Press Release
  Home Contact us Add to Favourites
Most Recent Postings
More Press Releses
Featured Sections

Event Finder
A daily roundup of exhibitions, promotions and other events in Dubai and the rest of the Emirates.
Submit an Event
Latest Dubai Press Releases >>

 
  Share

Gulf economies on solid growth track with GDP growth in 2018 expected to expand at the fastest rate since 2015

March 22, 2018 UAE:  According to ICAEW's latest report (Economic Insight: Middle East Q1 2018), 2018 marks a turning point for Middle East economies, allowing recovery for both oil exporters and oil importers.

Overall, the Middle East's GDP is expected to grow 2.9% this year, up from 1.1% in 2017.

However, the accountancy and finance body says the political environment remains challenging and continues to pose a downside risk to headline growth.

Economic Insight: Middle East Q1 2018, produced by Oxford Economics, ICAEW's partner and economic forecaster, says the region's overall economic outlook looks positive this year and in 2019, thanks to the rising oil prices (forecast at US$67 per barrel this year), expansionary fiscal policy and relative improvements in the overall security conditions.

Economic activity is expected to pick up for oil exporters driven by two main factors, rising oil prices and increased government spending.

Overall, GCC's GDP is expected to grow to 2.4% this year, up from 0.1% last year. And in 2019, as OPEC phases out its output cut, GDP growth is expected to accelerate further for oil exporters.

The outlook is similarly positive for oil importers in.

Lebanon's GDP is expected to accelerate to 2.7% in 2018 from an estimated 1.8% in 2017, boosted by public infrastructure investment and trade and tourism recovery.

While in Jordan, the kingdom's GDP is expected to have marginal growth of 2.5% this year, up from 2.3% in 2017, mainly due to improving external demand and a positive outlook from its main trading partners. 

Mohamed Bardastani ICAEW Economic Advisor and Senior Economist for Middle East at Oxford Economics, said: “Middle East economies are recovering from the difficult years of a low oil environment, various austerity measures and geopolitical risks.

But more reforms are required to address the fundamental problems that have plagued so many countries of the region for so long, including reducing high unemployment rates, promoting fair competition and better regulation, investing in talent and strengthening women's legal rights.”

Saudi Arabia enters a new era

Saudi Arabia is undergoing various fundamental economic and social changes.

For the first time, Saudi citizens are paying 5% VAT on goods and services, a sweeping anti-corruption crackdown generated more than US$100bn for the Saudi government, cinemas are expected to open as soon as March, and Saudi women will be permitted to drive from June. 

Real GDP is expected to rebound to 2% growth in 2018, after contracting by 0.7% last year, underpinned by expansionary fiscal policy and recovery in oil prices.

The oil sector contracted by 3.0% in 2017, primarily due to the OPEC deal that saw Saudi Arabia cut supply by about 0.5m barrels per day.

The extension of the OPEC deal until the end of 2018 will cap oil sector growth, which is expected at 1.1% this year. However, recovering oil prices and the opening of Jizan refinery this year will improve the overall outlook. 

The non-oil sector is expected to grow 2.6% in 2018, thanks to various pro-growth government initiatives.

The Saudi government announced the largest ever budgeted expenditure, including a 14% year-on-year increase in capital expenditure.

Budget spending will also be complemented by the release of state funds amounting to SAR50bn from the National Development Fund and up to SAR83bn from the Public Investment Fund.

Michael Armstrong, FCA and ICAEW Regional Director for the Middle East, Africa and South Asia (MEASA), said: “The outlook for Saudi Arabia's economy looks positive thanks to reforms and rising oil prices.

However, various challenges remain such as rising living costs for households and higher input costs for businesses.

Sustainable and effective countermeasures would mitigate the adverse impacts.”

Household spending will be weighed down by the 5% VAT and rising living costs as a result of higher electricity tariffs and gasoline prices introduced in January.

Inflation is expected to reach 4% this year, up from -0.3% in 2017.

For businesses, levies on expat labour and rising input costs pose additional challenges.

While on the monetary policy side, the expected three rate hikes in the US this year will translate into higher interest rates in Saudi given the US dollar peg – this would raise the cost of borrowing for businesses and consumers alike.

Critical phase for Oman

Oman's economy looks brighter, with the main boost coming from higher oil prices and ramp-up in gas output, which will boost government and private sector incomes and lift confidence.

The country continues to push ahead with the process of economic diversification (Tanfeedh) but the economy remains highly reliant on oil revenue, which makes up 70% of the budget. 

As a result, the fiscal position remains a key vulnerability – the government missed budget deficit estimates for the second consecutive year in 2017, but higher oil prices facilitate a more expansionary stance in 2018, even as Oman's VAT launch is delayed until 2019. Overall, Oman's GDP is forecast at 3.6% this year, up from just 0.2% in 2017.

“Oman's economy looks positive in the short term but more efforts are needed in order to build a sustainable economy.

There are real opportunities in the non-oil sector, especially in the tourism sector.

But the continuing absence of a clear succession plan is worrying,” said Maya Senussi, ICAEW Economic Advisor and Senior Economist for Oman at Oxford Economics.

The report also warns about the high unemployment rate which currently stands at around 17% (the region's highest).

The Oman government has to fix the underlying drivers of unemployment, particularly among the youth, with skill mismatch continuing to be a major hindrance.

Household spending power is expected to remain constrained, particularly for low-income earners.

Petrol price increases after subsidy removal, and impending excise taxes will pose a drag on purchasing power in 2018 as inflation rises.

The report also expects the following GDP growth in Middle Eastern economies:

  2017 2018 2019
Bahrain 2.6 2.1 2.8
UAE 1.7 2.6 4.1
Saudi -0.7 2.0 2.8
Kuwait  -1.7 2.4 6.0
Qatar  1.3 3.1 3.4
Oman 0.2 3.6 2.9
GCC 0.1 2.4 3.5
 
Lebanon 1.8 2.7 3.1
Iraq -0.3 2.5 3.0
Iran 3.0 4.1 4.1
Jordan 2.3 2.5 2.7
GCC + wider Middle East 1.1 2.9 3.6

 



Posted by : GoDubai Editorial Team
Viewed 3690 times
Posted on : Thursday, March 22, 2018  
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of GoDubai.com.
Previous Story : DEPARTMENT OF FINANCE COMPLETES ROUTE 2020 METRO PROJECT FINANCING OF $2.45b
Next Story : DED-Ajman cracks down on street vendors in cooperation with Municipality of Planning Department
Email this article Print this article

Share this article with your friends and followers
NewsVine

Comments

Back to Top  
Most Viewed Press Release posted in the last 7 days
Timeless Ties
COLAB - Dry Shampoo
ORANGE & BERGAMOT Awaken the Cult Icon New Additions
FOREO delivers the ultimate festival survival kit for a glow-on-the-go.
Samsung launches Exciting Smartphone Trade-In Program with Galaxy S9 or S9+
Enhance skin radiance, smoothness and brightness in just 14 days, with the new J...
The Perfect Gift Mark
Summertime Beauty Picks at Glambeaute.com
New XE 300 Sport Edition Wins Gripping Ice Race
Get Vibrant and lively hair with Rahua's new Color Full Range
Dubai Sports Council Pavilion a big hit at Bangkok SportAccord
Dubai-based Al Kasir Group launches three Crypto assets backed by diamonds
du to Offer New 9.7-inch iPad With Apple Pencil Support
Filorga Mesotherapist Derma Roller
A Royal Ramadan Experience by Master Chef Mama in Pullman Dubai Creek City Centre
Skyline University College Economics Day 2018: One Step towards Tomorrow
Penny Scallan Design Launches in the Middle East
New Blow Out Bar and Make-Up Studio SWISH by Immaclife Opens in Abu Dhabi in Apr...
Rolling Cones, a new luxury ice cream concept, launches at the Hyatt Regency Dub...
MINI at Auto China Beijing 2018
The new BMW M2 Competition
Mumzworld Announce Recruitment Drive To Empower Women in the Middle East
Pandora Shine Discover A New Way to Shine
Abu Dhabi Ship Building Company Launches Two 64-Meter Landing Ships for the Kuwa...
Sheikh Sultan bin Ahmed Al Qasimi Leads Sharjah Contingent to Kuwait Arab Media Forum
Toshiba Releases New, Powerful Surveillance and Video Streaming Internal Consume...
Genesis G70 Luxury Sedan Arrives in Middle East
Stylish Nursing wear at Mums and Bumps
Exclusive, Limited‐Edition, Swiss‐Made Cryptocurrency Watches
10 Kg gold for 100 winners at Malabar Gold & Diamonds
Olivia Burton Marble Florals - Embrace these styles for a new artistic way to wo...
Gifts for Ramadan at Hour Choice
Understanding what women want Balmain reveals the Madrigal Mini II
Airport Show Attracts Influential Aviation Leaders for Global Airport Leaders Fo...
Adamavi - Elegant, Timeles S, and Reliable
Pandora Spring Embrace Nature's Beauty
Mido Ramadan Watch Collection
April Marks Autism Awareness Month at Nursery Chain
Tommy Fleetwood joins OMEGA's line-up of golfing greats
Ashridge to help Saudi leaders explore and implement strategies for growth
In Its 100th Year, Panasonic Bullish On ME Growth
Village Street Sale at The Outlet Village offers designer outfits at great prices
The Beautiful Britain 2018
Ras Al Khaimah (RAK) Ruler Delivers Keynote Opening Speech to 14th Arabian Hotel...
Get ready for an exciting Ramadan at Danat Al Ain Resort
Tamouh unveils unique art piece dedicated to the late Sheikh Zayed at Cityscape ...
Mido Multifort Datometer Limited Edition - A piece of history on your wrist
'Global Automotive Aftermarket Manufacturers Gear Up for Robust Business Growth ...
du LaLiga HPC U16 Crowned UAE FA Academy League Champions and City FC Win U14 ...
Mint Middle East to Collaborate with Interac in UAE