The World Bank has urged the Gulf Cooperation Council (GCC) countries to integrate environmental sustainability into their strategies.

In its Gulf Economic Update report, the World Bank said that the diversification of the GCC economies towards more environmentally friendly industries will be vital to reduce greenhouse gas emissions and hedge against the risks, costs and trade-offs involved in the decarbonization of global production.

“The natural ecosystems in the GCC countries face profound pressures that threaten long-term growth and development. Climate change impacts will further amplify these threats,” said Issam Abousleiman, Regional Director, GCC countries Middle East and North Africa Region at the World Bank Group.

“Looking forward, a diversification scenario that does not consider environmental sustainability is no longer a viable option,” Abousleiman added.

Although the non-oil sectors in the region have expanded, the real GDP growth has weakened and it is estimated to drop to 0.8 per cent this year from 2 per cent in 2018.

The GCC countries have made important progress towards creating greener, more diversified economies. However, the report said that sustainability risks, including air pollution, coastal degradation, water scarcity, desertification and land degradation are mounting.

While the GCC countries committed about $10.1 billion to investments in renewable energy for the period between 2006 and 2018, the World Bank also noted that the Gulf states' combined renewable output totaled just 867 megawatts, less than one per cent of the 145 gigawatts of installed power capacity at the end of 2018.

The UAE accounts for about 70 per cent of the GCC’s renewable energy capacity, while Saudi Arabia accounts for about 17 per cent and Kuwait accounts for less than 10 per cent.

Growth in the GCC countries is expected to remain weak in 2019, before recovering in 2020 and 2021, in line with global growth.

The World Bank expects Saudi Arabia’s GDP growth to slow to 0.4 per cent in 2019 before rising to an average of 2.1 per cent over 2020-2021.

For the UAE, GDP growth rate is projected to accelerate from 1.7 per cent in 2018 to 3 per cent by 2021 and is expected to grow at 1.8 per cent this year.

(Writing by Gerard Aoun; editing by Cleofe Maceda)

(gerard.aoun@refinitiv.com)

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