GCC remains main source of growth for MENA region
GCC countries continue to be the main engine of economic growth in the Middle East and North Africa (MENA), with Qatar leading the way, said Qatar National Bank Group (QNB) in its weekly report.
Real GDP growth in the GCC registered an estimated 4.1 percent in 2013 with the highest growth rate in Qatar (6.5 percent) compared with 2.7 percent for the rest of the MENA region.
The outlook for 2014 suggests that the trend of a two-speed MENA is likely to be maintained. With a gradual recovery in global energy demand and a few new oil and gas developments in the region, the GCC hydrocarbon sector is expected to show moderate growth. At the same time, further large investment spending in the non-hydrocarbon sector is projected to lead to a growth acceleration in Qatar (6.8 percent), Saudi Arabia (4.5 percent) and UAE (5 percent). Overall, real GDP growth in the GCC region is likely to reach 4.7 percent this year.
A recovery in global energy demand and large investment spending are projected to accelerate growth in the GCC, while the rest of MENA is likely to continue to trail behind. For growth to converge within Mena in the future, political stability and structural reforms in the rest of the MENA region are essential.
The outperformance of the GCC relative to the rest of MENA in 2013 is a continuation of a trend established in recent years. While GCC hydrocarbon growth was negative due to a slow recovery in global energy demand and temporary maintenance stoppages in oil and gas production in Kuwait and Saudi Arabia, the non-hydrocarbon sector continued to expand rapidly on large investment spending.
Qatar led the GCC with double-digit growth in both the non-hydrocarbon sector and population as the ramp up in investment spending is drawing in a large wave of expatriate workers. In Saudi Arabia, the non-hydrocarbon sector expanded strongly (4.9 percent) on both private and public investments and higher consumption. In the UAE, large investments in the oil sector and a strong recovery in construction and real estate are estimated to have led to higher growth (4.8 percent). Bahrain (4.9 percent) and Oman (5 percent) are also estimated to have grown rapidly on a continued diversification drive, while Kuwait (0.8 percent) lagged behind.
The growth experience in the rest of the MENA region in 2013 was weaker. The Syrian conflict depressed growth in Jordan (2.8 percent), Lebanon (1 percent) and, to a lesser extent, Iraq (4.2 percent).
- China-Pakistan economic corridor: a game-changer for the Middle East?
- Suspended tax transfers pushed Palestinian economy to the brink
- Egypt passed the economic conference with flying colours, but what's next?
- Why the GCC really needs a VAT tax
- Selfies, jokes, and billions: Sisi 'boisterous' after economic summit, but the hard part has just begun