Saudi Arabia, UAE eye strong growth amidst challenges

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As the world recovers from the Covid-19 pandemic, its economic revival is tied to several factors.
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  • Saudi Arabia will jump from t19th to 17th in the World Economic League Table by 2021
  • The UAE is expected to move up in the table from 34th in 2021 to 33rd in 2036

For the first time in history, the world economy is on track to surpass $100 trillion in 2022.

That’s thanks to how well the global economy is recovering from the effects of the Covid-19 pandemic, says a report from the London-based economic consultancy group Center for Economics and Business Research or Cebr.

According to the firm, China will overtake the United States as the world’s largest economy in 2030, two years later than predicted in the group’s annual report last year, but three years earlier than its pre-pandemic forecast.

India appears to be on the verge of overtaking France in 2022 and then the United Kingdom in 2023 to reclaim its position as the world’s sixth-largest economy.

Germany, meanwhile, is predicted to be on track to overtake Japan in terms of economic output in 2033.

The report said Russia may join the top 10 economies by 2036, and Indonesia was on its way to taking ninth place in 2034.

The analysis predicted that climate change would reduce consumer spending by an average of $2 trillion per year until 2036, as businesses pass on the expense of decarbonization expenditures to consumers.

Here are the report’s expectations for the Arab countries:

Saudi Arabia

In line with strengthening environmental commitments amongst global policymakers and the expected decline in demand for fossil fuels, the Saudi Arabian economy will likely face critical structural changes in the coming years.

Diversification will be key to its future prosperity, with the Saudi government taking active steps towards this goal via strategic frameworks such as Saudi Vision 2030.

This framework will seek to increase non-oil international trade, promote investment opportunities, and strengthen the public sector.

Cebr expects the Saudi Arabian economy to grow strongly in 2022 as the recovery from the pandemic continues. As a result, output in 2022 is set to be 4.8 percent higher than in 2021.

Looking further ahead, an average annual growth rate of 2.2 percent is forecast between 2023 and 2036.

This will see Saudi Arabia climb from the 19th place in the World Economic League Table in 2021 to 17th place by the end of that period.

The UAE

The United Arab Emirates’ GDP catch-up to pre-pandemic levels is expected in 2023.

Cebr forecasts that the annual GDP growth rate will accelerate to an average of 3.1 percent between 2022 and 2026 before slowing to an average of 2.7 percent per year between 2027 and 2036.

In the coming 15 years, the UAE is expected to gradually move up in the World Economic League Table from 34th in 2021 to 33rd in 2036.

Qatar

Qatar’s contraction in GDP of 3.6 percent in 2020 was followed by an estimated expansion of 1.9 percent in 2021.

Such growth would be insufficient to bring output back to pre-pandemic levels.

The country’s economy is expected to reach pre-crisis levels in 2022.

The annual GDP growth rate is forecast to pick up to an average of 3.6 percent between 2022 and 2026.

Over the subsequent nine years, Cebr estimates that the Qatari economy will expand by 3.4 percent annually.

In the coming 15 years, Qatar is expected to gradually move up in the World Economic League Table, from 57th position in 2021 to 54th place in 2036.

Bahrain

The economy saw a 5.1 percent GDP contraction in 2020, followed by an expansion of 2.4 percent in 2021.

This left output 2.8 percent below 2019 levels in 2021, with the economy expected to return to pre-crisis levels in 2022

Bahrain’s public finances are precarious, with a government debt-to-GDP ratio of 123.3 percent in 2021.

Moreover, in 2021, the fiscal deficit stood at 8 percent of the GDP.

This combination of high government debt and a large deficit paints a worrying picture for the country’s fiscal stability in the coming years.

The country’s economy is heavily dependent on petroleum, with revenue from that head accounting for 85 percent of budget revenues.

Thus, public finances are vulnerable to international crude oil prices and expected falling demand for petroleum because of the global transition to net-zero emissions.

Between 2021 and 2036, Bahrain is forecast to move from the 93rd place to the 98th place in the World Economic League Table.

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