GCC economies likely to grow 2.3% in 2019: NBK

Mubasher: GCC economies are expected to grow by 2.3% in 2019 and 2.6% in 2020, from an estimated 2.4% in 2018, the National Bank of Kuwait (NBK) said in its MENA Outlook Report released on Tuesday.

The positive economic growth is backed by the expansive public spending and private sector stimulus, leading regional governments to continue their infrastructure and development projects, with Saudi Arabia’s record budget of SAR 1.1 trillion ($293 billion).

Global growth outlook

This forecast came “against a backdrop of increased global economic uncertainty” as the International Monetary Fund (IMF), in October 2018, cut its forecast on global economic growth by 0.2% to 3.7% by 2020, amid concerns over the trade war between the US and China, the report said.

Non-oil growth

Non-oil growth in the GCC is projected to advance from 2.9% in 2018 to 3.3% in 2019 and 3.5% in 2020, NBK’s MENA outlook report added.

“Private sector stimulation programmes and productive infrastructure investments will support non-oil growth over the forecast period,” the reported explained.

Oil prices

With lower oil prices expected in 2019, the fiscal balancing process for GCC countries, except Qatar, will likely be postponed, as the world's richest country per capita decided to quit the Organization of the Petroleum Exporting Countries (OPEC), freeing it from production cut commitments.

Expansion plans

Despite OPEC’s plans to cut oil output, GCC governments are expected to resume their oil and gas expansion plans. The UAE is about to reach its crude production capacity target of 3.5 million barrels per day (bpd), after allocating $145 billion in investments over the next five years.