The private sector will drive Gulf states’ growth
Government polices in the Gulf states will support the growth of the non-hydrocarbon private sector into the medium term
Source: IMF; Global S&P; Oxford Analytica
Outlook
The Gulf Cooperation Council (GCC) states will continue to varying degrees to attempt to diversify their economies away from a reliance on oil and gas revenues by promoting private-sector activity.
Government policies will include sweeteners such as long-term residency visas to attract high-value foreign talent, while focusing on higher value-added sectors such as artificial intelligence (AI) and green energy.
Funding for the development of the private sector, through infrastructure promotion and government investment in the chosen sectors, will come from the assets of the various sovereign wealth funds.
Impacts
- The non-hydrocarbon private sector will drive growth over the next five years in all economies, offsetting weak hydrocarbon sector activity.
- Kuwait will be the slowest to diversify, followed by Qatar, while Oman’s efforts will be driven by its low hydrocarbon reserves.
- Scarce resources, such as a lack of skilled personnel, could undermine competition between Saudi Arabia and the UAE.
- The threat of regional insecurity spreading to the Gulf could slow diversification plans into the medium term.
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