GCC Economies Witnessing a Golden Age of Progress and Growth

Regional economies are present process a constructive cycle of bettering competitiveness and progress amid greater oil revenues and financial reforms, Majid Jafar tells Davos  
Area’s digital financial system will attain $130 billion by finish of decade, whereas regional sovereign wealth funds are managing $4 trillion, a 3rd of the worldwide whole
Overseas Direct Funding in GCC reaches 5% of GDP, highest of any area
Whole contract awards of US$205 billion in 2023
Majid Jafar: “We’re having fun with the fruits of visionary management and many years of stability within the area.”

Gulf Cooperation Council (GCC) economies are experiencing a golden age of progress and growth supported by a constructive cycle of reform, greater oil revenues, and falling rates of interest, Majid Jafar, CEO of Crescent Petroleum, advised an viewers of enterprise leaders, policymakers, and NGOs on the World Financial Discussion board in Davos. Lengthy-term infrastructure growth and funding programmes, coupled with essential reforms throughout all financial sectors, have created fertile floor for wholesome, sustainable progress that’s being accelerated by bettering financial situations, with regional GDP progress anticipated to be near 4% within the coming years.

“This can be a golden age for the GCC because the area’s stability, infrastructure constructing, and funding flows enhance its world affect and its financial system simply as a brand new technology of well-educated, formidable younger folks enters the workforce, promising to proceed on this path,” Jafar advised the viewers talking on a panel on the World Financial Discussion board annual assembly in Davos, Switzerland. “We’re having fun with the fruits of visionary management and many years of stability within the area,” he added.

Jafar commented on the panel “Gulf Economies: All In”, which mentioned the financial outlook for GCC economies. Additionally talking on the panel have been H.E. Ahmed Jassim Al-Zaabi, Chairman of the Abu Dhabi Division of Financial Improvement, H.E. Khalid Al-Falih, Minister of Funding of Saudi Arabia, H.E. Ali Ahmed Al-Kuwari, Minister of Finance of Qatar, H.E. Sheikh Salman bin Khalifa Al Khalifa, Minister of Finance and Nationwide Financial system of Bahrain, and Mrs. Henadi Al-Saleh, Chairman of the Board of Agility.

He mentioned that GCC economies are displaying sturdy and sustained progress regardless of world uncertainties and regional turmoil, having fun with relative stability resulting from structural reforms, fiscal accountability, and bold financial diversification plans. 

Whereas the oil and gasoline sector proceed to make an essential contribution to the area’s financial system, rising non-oil sectors and exports will drive progress within the GCC in 2024, Jafar mentioned, supported primarily by continued funding in tourism and expertise sectors. Funding into AI and different cutting-edge expertise, mixed with supporting legal guidelines and insurance policies enhancing the enterprise setting, has helped develop the digital financial system to $38 billion in 2023 and is anticipated to succeed in greater than $140 billion by 2031. The area’s sovereign wealth funds presently handle $4 trillion, a 3rd of the worldwide whole and a rise of 70% over the previous 5 years.

Over the previous decade, funding in infrastructure has yielded nuclear energy technology within the UAE and new rail, pipeline, and highway networks which might be shifting items extra effectively and promise to make the area a nexus of worldwide transport. Electrical grid interconnections amongst GCC states have lowered electrical energy prices and elevated reliability. Whole contract awards in 2023 reached US$205 billion, Jafar mentioned.

In the meantime, formidable reform agendas akin to Imaginative and prescient 2030 in Saudi Arabia, “We the UAE 2031”, Oman Imaginative and prescient 2040, and the Qatar Nationwide Imaginative and prescient 2030 have made appreciable progress, notably within the social and enterprise arenas, coupled with efforts to reinforce fiscal sustainability and resilience, strategic industries, and digital and inexperienced infrastructure.

In accordance with the IMF, GCC international locations have attracted extra FDI as a share of GDP than some other area. Greater than $26 billion in FDI poured into the area in 2022, greater than 5% of GDP. This share has solely grown additional with regulatory reforms permitting 100 per cent overseas possession of onshore corporations and adjustments to Public-Personal Partnerships (PPP) laws to encourage extra in depth non-public sector participation. Previously decade, GCC international locations have develop into extra central to the worldwide FDI community, pushed by the UAE, Saudi Arabia, and, to some extent, Kuwait.

In the meantime, outstanding examples of management of initiatives like COP28 and profitable house mission programmes have allowed the GCC to seize the worldwide creativeness, offering regional management at a difficult time for the remainder of the MENA area, Jafar mentioned.

Jafar mentioned that enabling, empowering, and enhancing the non-public sector will probably be important to sustaining progress ranges and creating extra job alternatives for the younger workforce. Accelerating innovation in monetary regulation will even deepen capital markets, making the area a centre of growth of blockchain and fintech.

Personal sector job creation can also be important for making certain younger folks’s profession growth and enabling a productive financial system. Current efforts and mandates for Emiratisation and Saudisation have considerably elevated the variety of younger residents, notably ladies, in non-public corporations. And a brand new technology of formidable, well-educated younger women and men graduating from universities will play an essential function in driving progress.

“These are essential benefits, and as a area, we should additionally embrace new applied sciences whereas we put money into getting ready for a brand new period of labor and allow younger folks to succeed in their full potential,” Jafar mentioned.

The World Financial Discussion board annual assembly takes place on 16-20 January 2024 in Davos, Switzerland. The Annual Assembly convenes leaders from authorities, enterprise, and civil society to deal with the state of the world and focus on priorities for the yr forward. It’s going to present a platform to interact in constructive, forward-looking dialogues and assist discover options by public-private cooperation.