GCC 2024 Economic Prospects and Growth Patterns
As we step into 2024, the Gulf Cooperation Council (GCC) region stands at the cusp of substantial economic growth and business expansion. The World Bank's Global Economic Prospects Report paints an optimistic picture, projecting a rebound in GCC economic growth after a comparatively slower 2023, primarily attributed to reduced activity in the oil sector.
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The World Bank's report predicts a robust economic outlook for the GCC in 2024 and 2025, with an overall regional growth of 3.6 percent and an increase to 3.8 percent, fueled by the resilient non-oil sectors. Noteworthy challenges faced by the MENA region in 2023, such as oil production cuts, inflation, and sluggish private sector activity, are acknowledged.
Forecasts highlight the UAE's GDP expanding by 3.7 percent in 2023 and an accelerated growth of 3.8 percent in 2024. Simultaneously, Saudi Arabia is poised for a growth rate of 4.1 percent in 2024, further increasing to 4.2 percent.
Individual GDP growth projections for GCC countries are as follows:
- Saudi Arabia: Expected growth of 4.1 percent in 2024, with a further increase to 4.2 percent in 2025.
- UAE: Anticipated real GDP growth of 3.7 percent in 2024, with a subsequent rise to 3.8 percent in 2025.
- Bahrain: Forecasted growth of 3.3 percent in 2024 and 3.2 percent in 2025.
- Oman: Estimated growth of 2.7 percent in 2024, with a further increase to 2.9 percent in 2025.
- Kuwait: Projected growth rate of 2.6 percent in 2024 and an increase to 2.7 percent in 2025.
- Qatar: Anticipated growth of 2.5 percent in 2024, with a projected further increase to 3.1 percent in 2025.
Diversification Drive:
Traditionally dependent on oil revenues, the GCC nations are unwavering in their commitment to diversify their economies. In 2024, increased investments in technology, renewable energy, and tourism signal a strategic shift away from reliance on fossil fuels.
Saudi Arabia has witnessed substantial growth in its tourism sector, positioning itself as a premier global destination. Driven by the ambitious Vision 2030, the country aims to become a leading tourist hotspot. In October 2023, Tourism Minister Ahmed bin Aqeel Al-Khateeb highlighted Saudi Arabia's remarkable tourism growth, welcoming over 30 million tourists, a significant 40 percent of the targeted number. The sector plays a pivotal role in fostering economic growth, with plans to boost its GDP share from 3 percent in 2019 to an ambitious 10 percent by 2030, targeting 150 million tourists.
To realize these objectives, the Ministry of Tourism has committed to a substantial 10-year, US$1 trillion investment plan, focusing on expanding hotel capacity by 310,000 rooms by 2030. Strategic investments in tourism-related infrastructure, including airports, hotels, and transportation, have significantly enhanced the overall tourist experience.
Facilitating entry for visitors, Saudi Arabia launched the KSA Visa in January 2024, streamlining the application process for various purposes, including Hajj, Umrah, tourism, business visits, and employment. Aligning with its strategy, the kingdom hosts events like the Formula 1 Saudi Arabia Grand Prix, conferences, and summits in 2024. As the host of the 2030 Expo in Riyadh, Saudi Arabia is poised to secure the 2034 World Cup hosting, reinforcing its status.
Technology and Innovation:
The GCC's journey to become a global tech hub will gain momentum in 2024. Initiatives like smart cities and digital transformation projects underscore a commitment to harnessing technology for sustainable growth.
Renewable Energy Revolution:
Global awareness of climate change prompts GCC countries to embrace renewable energy sources. Ambitious projects in solar and wind energy mark a significant move towards sustainability.
Renewable energy presently contributes a mere 3 percent to the GCC's total power output, with the UAE leading at 14 percent, representing 60 percent of the region's renewable capacity.
In contrast, Saudi Arabia's renewable output is less than 1 percent, emphasizing the need for increased efforts in decarbonization. Despite this, the ongoing energy transition, marked by widespread renewable deployment, presents opportunities for climate change mitigation, adaptation, and economic diversification.
In 2022, the UAE directed approximately US$36 billion towards renewable projects, with plans to finance solar and wind plants in Azerbaijan by 2027. Qatar aims to double its renewable capacity by 2024, expanding solar capacity to 1.6GW. Oman focuses on sustainable finance to reduce fossil fuel reliance, attracting ESG investors. The GCC's robust energy infrastructure sets the stage for unprecedented renewable investments post-COP28, signaling a transformative shift from fossil fuels to renewables in the region's energy landscape.
Infrastructure Development:
A cornerstone of the GCC's economic strategy remains ongoing and planned infrastructure projects. From cutting-edge transportation networks to world-class healthcare facilities, these investments aim to enhance the overall quality of life and attract international businesses.
Global Collaborations:
In an interconnected world, collaboration is key. The GCC's focus on fostering international partnerships and trade agreements is set to amplify its influence on the global stage.
Economic Outlook:
The World Bank's report anticipates overall GCC growth of 3.6 percent in 2024, with a further increase to 3.8 percent in 2025. Leading this charge are economic powerhouses UAE and Saudi Arabia, with anticipated growth rates of 3.8 percent and 4.2 percent, respectively.
Key Country Insights:
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Saudi Arabia's Tourism Thrust:
- The tourism sector in Saudi Arabia experiences solid growth, aligning with the national Vision 2030.
- The kingdom aims to increase its share of the national GDP from 3 percent to an ambitious 10 percent by 2030, attracting 150 million tourists.
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Energy Transition:
- Renewable energy constitutes a mere 3 percent of total power output in the GCC.
- The UAE leads with 14 percent of energy generation from renewables, while Saudi Arabia intensifies efforts to align with decarbonization objectives.
This article was previously published on UAE Moments. To see the original article, click here