Dubai: The GCC could become the sixth largest economy in the world by 2030 if it is able to keep growing at an annual average of 3.2 per cent for the next 15 years EY's latest Growth Drivers report said on Monday.

If GCC countries were to become one single market instead of six separate ones today it would be the ninth largest economy in the world today - similar in size to Canada and Russia and not far from India EY said in its report 'Strength in unity.'

"GCC governments are facing a decisive moment. With oil price falling they have to accelerate the creation of growth drivers that do not rely on oil revenues" said Gerard Gallagher Mena Advisory Leader EY.

The GCC countries are now exploring options and taking decisions such as opening up to foreign investors ending subsidies introducing taxation optimising costs and cutting jobs in the public sector Gallagher pointed out.

"There are signs that serious change has begun. However these reforms could be less disruptive and more effective as part of a wider push towards rekindling and modernising the drive towards a single GCC market. That would bring the benefits of scale and efficiency to the diversification drive and strengthen the most productive parts of the private sector by introducing more competition and more jobs."

The analysis illustrated that removing obstacles to trade and investment would boost the GCC GDP by 3.4 per cent or $36 billion with 96 per cent of the gain coming from the removal of bureaucratic barriers to efficiency. The benefits would be spread across all six economies with the strongest gains in the UAE Saudi Arabia Bahrain and Oman with increases in GDP between 3.5 per cent and 4.1 per cent in the four countries.

The report argued that the next phase of the GCC integration needs to address and facilitate change in three key areas including trade foreign investment and institutions.

More efforts should be taken to transform the customs union into a modern technology-enabled single market that addresses the bottlenecks to cross-border business and optimise costs in the long run.

"There is a need to streamline and align approaches to foreign investment and company ownership regulations to increase the size and competitiveness of the entire private sector while building GCC institutions that have the capacity to sustain momentum and push against vested interests" he said.

A fully functioning single market would reduce overall trade costs in the GCC boost productivity and encourage higher levels of intra-regional trade.

"The far greater effect however would be to boost long-term productivity levels by increasing competition in the private sector attracting significantly higher levels of foreign investment and creating more streamlined and effective institutions to enable world-class business.

"There are immediate steps that the GCC could take that would optimise the existing levels of cooperation bringing significant economic gains to each of the member countries while allowing them to focus separately on creating the incentives that will make them most attractive as investment locations" said Phil Gandier Mena Transactions Leader EY.

Pinpointing and resolving these barriers might not sound like integration - but it would be a major step forward to leveraging the GCC's common strengths to the benefits of each country he said.

"A first step would be to work with the private sector to identify the top ten barriers to doing business across the GCC. These would include specific obstacles at borders that slow the free movement of goods outdated laws that don't reflect the realities of the digital world and the multiplicity of regulations relating to business in each country that make compliance so hard for cross-border investors" said Gandier.

The report observed that the most significant impact of the GCC integration comes not from boosting intra-GCC trade but from making the region's trade and investment relations with the rest of the world easier.

"Creating a single market with foreign investment regulations that are both streamlined and aligned would make it more attractive for global companies to invest heavily in the GCC market as a whole."

Issac John Associate Business Editor of Khaleej Times is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years including 23 years with Khaleej Times. A post-graduate in English and graduate in economics he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends he is respected for his astute understanding of the local business scene.