GCC economies to grow at 6.4% in 2022: IMF

Muscat: Countries in the Middle East are expected to gain up to $1.3 trillion in the next four years from additional oil revenues, according to the International Monetary Fund

(IMF).

The gains, due to high oil prices, will provide ‘firepower’ to the sovereign wealth funds (SWFs).

The region’s oil and gas exporters, especially the Gulf Cooperation Council (GCC) countries, “will see additional cumulative oil revenues of $1.3 trillion through 2026,” IMF director for the Middle East and North Africa, Jihad Azour, was quoted as saying by FT.

Most of the oil and gas exporters in the region have large SWFs and have been using them to use the windfall in further investments.

Azour said that the Gulf nations must use the gains to invest in technology. “It’s an important moment for them to…accelerate in sectors like technology [domestically] as this is something that will allow them to increase productivity,” he told FT.

Usually, the GCC economies have depended on global oil prices. This has left them vulnerable to possible downturns when the prices recede. It puts additional pressure on the governments.

For the Gulf Cooperation Council, the growth rate has been estimated at 6.4 percent in 2022 by the IMF. In 2021, its growth rate was 2.7 percent.

What is going to be really important is how they [Gulf states] manage this new cycle and how they maintain, at the same time, the benefits of the additional liquidity and the policies that will not lead them into procyclicality,” Azour said.

The IMF forecasts that economic growth in the Gulf Cooperation Council, which includes Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, Qatar, and Oman, will accelerate from 2.7 percent in 2021 to 6.4 percent this year.