ABU DHABI, UAE – Led by Saudi Arabia and the UAE, the Gulf economies are doing well despite the challenges and tough times the world is going through, according to global institutions and rating agencies.
The gross domestic product of Saudi Arabia, the world’s top oil-exporting country, grew an annual 9.3 per cent in the three months to the end of September, while the UAE economy has experienced sustained momentum in 2022, boosted by Expo 2020 and the easing of COVID-19 restrictions, they have suggested.
The UAE
The OPEC Monthly Oil Market Report for December has cited recent economic indicators suggesting strong growth has been maintained in most activities across the UAE.
“The tourism sector, which accounts for around 6 percent of the UAE’s GDP, experienced strong growth and Dubai was again the world’s busiest international airport, with passenger numbers for the first time exceeding pre-pandemic levels in 2Q22,” added the report.
Considering the FIFA World Cup in Qatar, the report continued, tourism growth might increase further and boost 4Q22 GDP growth.
“In October, the S&P Global UAE PMI increased to 56.6 from 56.1 amid strengthening demand. The current expansion momentum might carry over to 2023 in line with government policies that aim to increase foreign direct investment through eight comprehensive economic and trade agreements it expects to sign in the near term,” the report noted.
Saudi Arabia
The International Monetary Fund meanwhile expects Saudi economy to expand by 7.6 percent in 2022 on the back of export boost and its internal organic GDP growth.
“Given Russia is a big exporter of oil and relations between Russia and the West aren’t good right now, energy prices have increased in 2022 from 2021. As one of the leading exporters of oil, Saudi Arabia has benefited from the higher prices with more exports,” an IMF report has suggested.
A latest report by the Organisation for Economic Co-operation and Development has also highlighted that the rally in oil prices fuelled the Kingdom’s growth.
Saudi Arabia’s economy grew by 8.8 per cent in the third quarter of 2022 from the same period a year ago, exceeding initial estimates, driven by a sharp rise in both oil activities and non-oil activities, the latest government statistics showed.
Growth in the Arab world’s biggest economy during the three months to the end of September was higher than the 8.6 per cent third-quarter flash estimate released at the end of October, according to the latest data by General Authority for Statistics (Gastat).
Oil-related activities in the kingdom grew 14.2 per cent year-on-year in the three-month period and non-oil activities boosted GDP by 6 per cent on an annual basis, Gastat said.
Compared with the second quarter of 2022, Saudi Arabia’s output rose 2.6 per cent in the third quarter of this year, OECD data showed.
Qatar
Qatar’s economy is poised to rise swiftly in the coming year as the country is witnessing a large number of tourists with the ongoing FIFA World Cup 2022.
Recent data by Fitch Solutions, a research, and analytics group on global markets and macroeconomic environments show that the leisure industry will surge leaving the net exports to strengthen Qatar’s economy.
The report stated that “Net exports will also support economic activity in 2023, largely on the back of strong tourism activity”.
The latest figures suggest that Qatar’s tourism sectors will continue to increase with many leisure destinations that were opened to the public leaving the visitors mesmerised to enable them in arriving to the Gulf State.
“In 2023, we believe that tourist arrivals will continue to grow, and will slightly exceed pre-pandemic levels,” it said.
The report said: “In 2023, we believe that Qatar’s tourism industry will benefit from widespread global marketing campaigns promoting the country in the lead-up to the FIFA World Cup, as well as an uptick in sporting activities in the newly built stadiums.”
With the increasing number of tourists, the industry anticipates reaching a significant number of 3 million people, slightly above the previous peak of 2.9 million people in 2016.
Bahrain
S&P Global Ratings has revised its outlook on Bahrain to “positive” from “stable”, citing the government’s fiscal reforms and high crude prices.
“The positive outlook reflects the government’s ongoing implementation of the updated fiscal balance programme (FBP) by expenditure cuts and revenue-enhancing initiatives, including the doubling of the value-added tax (VAT),” the ratings agency said.
The Arab country is benefiting from a surge in regional activity tied to higher oil prices. Brent, the benchmark for two thirds of the world’s oil, is currently trading at about $83 a barrel after falling to less than $30 in 2020.
Bahrain’s economy grew 6.9 per cent in the second quarter of 2022 to record the highest rate of growth in the past 11 years, driven by a strong performance in the country’s non-oil sectors involved in the country’s economic reform plan.
Kuwait
The latest IMF report suggests that Kuwait’s real GDP growth in 2022 will rise 8.7 percent as the country has substantial amounts of oil to export.
In 2021, Covid-19 caused Kuwait’s economy to contract 8.9 percent. With a rebound in domestic consumption, the country’s economy exited a two-year recession in 2021 with an estimated real GDP growth of 2.3 percent.
Like Saudi Arabia, Kuwait has benefited from higher oil prices in 2022. The Gulf country has a current production capacity of 3.15 million barrels per day. Given its production, oil accounts for 95 percent of the country’s exports and around half of its GDP. The IMF expects Kuwait’s real GDP to rise 8.7 percent in 2022.
Oman
Oman posted a budget surplus of more than 1.2 billion rials ($3.11 billion) in the first 10 months of 2022, compared with a deficit of about 1 billion rials in the same period a year ago, driven by higher oil revenue.
The Gulf country’s total public revenue from January to October surged more than 42 per cent to about 11.86 billion rials, up from 8.33 billion rials a year earlier, according to preliminary data from the Ministry of Finance.
Total public spending during the same period increased by 14 per cent to 10.65 billion rials ($27.66 billion).
The sultanate surpassed last year’s total of 8.4 billion rials when public spending hit 9.4 billion rials at the end of September, after coming close to matching it in August.
Development expenditure rose 10 per cent annually to 765 million rials, which represents 70 per cent of the 1.1 billion rials allocated for total developmental spending.
Oman is poised to post its first yearly fiscal surplus in a decade this year, a Fitch Solutions report released in August showed.
The sultanate’s 12-month fiscal surplus is expected to amount to 6.5 per cent of its total gross domestic product while revenue is expected to rise further in the second half of the year because of high energy prices, it added. In November, S&P Global Ratings had upgraded Oman’s credit ratings from “BB-” to “BB” with a stable outlook, with the agency indicating that the “significant improvement” in Oman’s fiscal performance and balance of payments positions was driven by continuing fiscal consolidations and higher oil prices.