(MENAFN - Qatar News Agency) Wait city june 05 (qna) - upgrades in development indicators reaffirm strong growth of gcc economies but greater economic diversification is needed to absorb oil markets volatility a senior executive said.
imf deputy managing director min zhu said "gcc countries have grown strongly and seen huge improvements in their development indicators but they remain susceptible to fluctuations in oil markets.
"they need greater economic diversification to boost productivity living standards create jobs and reduce fiscal and external risks associated with the heavy reliance on oil revenues." the prevailing growth model in the gcc has achieved a rapid improvement in human development indicators but has also resulted in a decline in relative economic performance.
the main features of this growth model are the reliance on oil as the main source of export and fiscal revenues the dependence of the private sector on expatriate labour and the concentration of economic activity in the low skilled non-tradable sector he added.
the imf mentions uae airports and seaport infrastructure development saudi arabia's economic cities qatar's commercial airline bahrain's aluminum industry and smes in kuwait and oman as gcc success stories of diversification.
panellists examined the rationale for diversification the imf said. some argued that diversification away from oil and other extractive industries would lead to higher long-term growth more jobs for the young and growing populations less dependence on returns from sovereign wealth funds.
others pointed to evidence that growth and diversification are positively correlated as diversified economies are less likely to experience economic volatility due to external or internal unfavourable economic conditions. (qna)