Oct 21 2013
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Economic diversification to fuel GCC growth
GDP in the MENA region is expected to grow by 3.0 per cent in 2013, down from 3.7 per cent in 2012. This decrease can be partly attributed to lower commodity prices and reduced demand for Middle East exports. The current political situation in Egypt is also continuing to impact economic activity across the region. Egypt's GDP is projected to rise by 1.7 per cent in 2013 and 2.0 per cent in 2014. More significant GDP growth is dependent on Egypt's political stability and consequent economic recovery. The situation is very different in the GCC, particularly in the UAE, Saudi Arabia and Qatar. Growth in the United Arab Emirates is predicted to reach 4.1 per cent in 2015, up from 3.3 per cent in 2012. This increase will be driven primarily by the recovery of key sectors, including financial services and construction. The UAE has focused on diversifying its economy and concentrating on the non-oil sectors, with significant infrastructure projects planned in both Dubai and Abu Dhabi. Moreover, fiscal policy will remain accommodative in both Dubai and Abu Dhabi, with several infrastructure projects in the pipeline.
GDP growth in Saudi Arabia is projected at 4.3 per cent in 2013 and 4.6 per cent in 2014. These figures represent a slowdown from 6.8 per cent in 2012, which can be attributed to reduced oil production, down by 3.5 per cent in 2013. In contrast to developments in the oil sector, non-oil growth will remain robust in the next few years. Consumer spending will grow strongly, buoyed by fast growth in retail lending and a falling unemployment rate, particularly for males. Meanwhile, fiscal policy will remain supportive, with government spending forecast to rise by an average of 7.4 per cent per annum across 2014-16. Qatar also continues to demonstrate robust growth. The economy's focus has been on diversification in non-oil sectors such as manufacturing, construction, transport, communications, trade, hotels and government services, which are projected to increase by nearly 10 per cent annually.
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