16, Jan 2024
Gulf Cooperation Council (GCC) economies are experiencing a golden age of growth and development supported by a positive cycle of reform, higher oil revenues, and falling interest rates, Majid Jafar, CEO of Crescent Petroleum, told an audience of business leaders, policy makers and NGOs at the World Economic Forum in Davos. Long-term infrastructure development and investment programs, coupled with crucial reforms across all economic sectors have created fertile ground for healthy, sustainable growth that is being accelerated by improving economic conditions, with regional GDP growth expected at close to 4% for the coming years.
“This is a golden age for the GCC as the region’s stability, infrastructure building, and investment flows boost its global influence and its economy just as a new generation of well-educated, ambitious young people enters the workforce, promising to continue on this path,” Jafar told the audience speaking on a panel at the World Economic Forum annual meeting in Davos, Switzerland. “We are enjoying the fruits of visionary leadership and decades of stability in the region,” he added.
Jafar made his comments on the panel “Gulf Economies: All In”, which discussed the economic outlook for GCC economies. Also speaking on the panel were H.E. Ahmed Jassim Al-Zaabi, Chairman of the Abu Dhabi Department of Economic Development, H.E. Khalid Al-Falih, Minister of Investment 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 National Economy of Bahrain, and Mrs. Henadi Al-Saleh, Chairman of the Board of Agility.
Despite global uncertainties and regional turmoil, GCC economies are showing strong and suatained growth, enjoying relative stability due to structural reforms, fiscal responsibility, and ambitious economic diversification plans, he said.
While the oil ad gas sector continues to make an important contribution to the region’s economy, growing non-oil sectors and exports will drive growth in the GCC in 2024, Jafar said, supported in particular by continued investment in tourism and technology sectors. Investment into AI and other cutting-edge technology, combined with supporting laws and policies enhancing the business environment have helped grow the digital economy to $38 billion in 2023, and this is expected to reach more than $140 billion by 2031. And the region’s sovereign wealth funds currently manage $4 trillion, a third of the global total and an increase of 70% over the past 5 years.
Investment in infrastructure over the past decade has yielded nuclear power generation in the UAE, new rail, pipeline and road networks that are moving goods more efficiently and promise to make the region a nexus of global transport. And electric grid interconnections among GCC states has enabled reduced electricity costs and greater reliability. Total contract awards in 2023 reached US$205 billion, Jafar said.
Meanwhile ambitious reform agendas such as Vision 2030 in Saudi Arabia, “We the UAE 2031”, Oman Vision 2040, and the Qatar National Vision 2030 have made considerable progress particularly in the social and business arenas, coupled with efforts to enhance fiscal sustainability and resilience, strategic industries and digital and green infrastructure.
According to the IMF, GCC countries have attracted more FDI as a share of GDP than any other region. More than $26 billion in FDI poured into the region in 2022, amounting to more than 5 percent of GDP, a share that has only grown further with regulatory reforms allowing 100 percent foreign ownership of onshore companies and changes to Public-Private Partnerships (PPP) legislation to encourage larger private sector participation. Collectively GCC countries have become more central to the global FDI network in the past decade, driven by the UAE, Saudi Arabia, and to some extent Kuwait.
Meanwhile prominent examples of leadership of initiatives like COP28, and successful space mission programmes have allowed the GCC to capture the global imagination, providing regional leadership at a challenging time for the rest of the MENA region, Jafar said.
Looking ahead, enabling, empowering and enhancing the private sector will be critical to sustaining growth levels and creating more job opportunities for the young workforce, Jafar said. Accelerating innovation in financial regulation will also deepen capital markets, making the region a center of development of blockchain and fintech.
Private sector job creation is also vital for ensuring the career development of young people and to enable a productive economy. Recent efforts and mandates for Emiratisation and Saudizaation have significantly increased the number of young citizens, particularly of women, in private companies. And a new generation of ambitious, well educated young men and women graduating from universities will play an important role in driving growth.
“These are important advantages and as a region we must also embrace new technologies while we invest in preparing for a new era of work and enable young people to reach their full potential,” Jafar said.
The World Economic Forum annual meeting is being held between 16-20 January, 2024 in Davos, Switzerland. The Annual Meeting is convening leaders from government, business, and civil society to address the state of the world and discuss priorities for the year ahead. It will provide a platform to engage in constructive, forward-looking dialogues and help find solutions through public-private cooperation.
