UAE to lead GCC non-oil economic growth, IMF says

The UAE and Saudi Arabia will dominate non-oil sector growth in the short term as the GCC area as a whole stays robust, powered by improved domestic demand and increasing gross capital inflows, according to the International Monetary Fund’s assessment.

The IMF stated that the growth in GCC non-oil income reflects the GCC nations’ ongoing financial and structural reforms.

“The region’s inflation is under control, and current account surpluses are strong. With pegs to the US currency in place, inflation is estimated to be controlled at 2.6% in 2023 and 2.3% in 2024 and to converge with that of the US in the medium run,” the IMF stated.

“Fiscal balances remain strong, thanks to fiscal changes and rising oil prices.” Primary non-oil deficits are predicted to fall to 24% of GCC combined GDP by 2028, with increasing non-oil revenue reflecting ongoing fiscal and structural reforms and restrained spending,” the IMF said.

The IMF forecasted that oil output, which is dependent on Opec+ choices, will be muted in the short term.

According to the IMF, the region should develop a comprehensive package of measures to alleviate short-term shocks and uncertainties while also addressing medium- and long-term concerns.

The IMF recommended the GCC continue to follow the US Federal Reserve’s monetary policies while constantly monitoring financial stability threats.

“GCC nations should continue to pursue budgetary consolidation in the medium term while guaranteeing intergenerational justice and sustainability. Non-oil income mobilization initiatives, the phase-out of energy subsidies, the rationalization of spending while boosting their efficiency, and the strengthening of social safety nets will all contribute to achieving this goal,” according to the IMF.

The IMF recommended that regional economies continue to modify structural policies by concentrating on diversifying away from hydrocarbons.