(MENAFN- The Peninsula) The Peninsula
The GCC economies are transitioning towards a 'new normal in 2018, allowing spending to start gradually recovering. Overall, GCC GDP is expected to grow from just 0.3 percent in 2017 to 2.8 percent next year, and an acceleration from 1.4 percent in 2017 to 3.2 percent next year in the wider Middle East. However, the accountancy and finance body ICAEW says several risks remain to growth in the region, including those from politics and security.
‘Economic Insight: Middle East Q4 2017', produced by Oxford Economics, ICAEW's partner and economic forecaster, says public finances now look to be on a more sustainable path in most economies in the GCC thanks to three main factors: the upcoming Value-Added Tax; the important social change in the region ; and as a result of a period of emergency austerity which saw public spending cut by almost 20 percent from 2015-2017, at the GCC level.
With a projected 3.4 percent growth in 2018, Qatar is expected to be the second fastest growing economy in GCC in 2018, after Oman, which is forecast to grow by 5.0 percent. Qatar will hit a 3.9 percent mark in 2019, while Kuwait is projected to grow the most by 9 percent in the same year.
With Opec-plus oil production cuts likely to be maintained through 2018, and reversed in 2019, GDP growth is expected to pick up to around 4 percent in both the GCC and wider Middle East in 2019. Within this, GCC oil GDP is forecast to rebound from a 2.3 percent contraction in 2017 to growth of 1.7 percent in 2018 and around 1 percentage point stronger in 2019. Growth in the GCC non-oil sector is forecast to pick up from 2.4 percent in 2017 to 3.7 percent in 2018 and 4.7 percent the year after.
Tom Rogers (pictured), ICAEW Economic Advisor and Associate Director of Oxford Economics, said: 'Economic growth prospects of the Middle East countries, particularly the GCC, are projected to improve in 2018 and the years after. But the political and security risks remain high and could limit or delay the recovery in the region.
However, several risks remain to growth in the region, including those from politics and security. In ICAEW's Mideast baseline forecast, Iran is expected to be a standout performer in 2018, with GDP growth of 4 percent forecast, boosted by rising output (not being a signatory to the Opec-plus deal), and the tailwinds of sanctions having eased in recent years. Although the direct economic impacts of the region's geopolitical tensions have so far been relatively modest, the strains could undermine regional cooperation on economic policy issues, and broader investor confidence in the region.
MENAFN2511201700630000ID1096146286
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.