[Economics] Why the Gulf region is well placed to play a key role in the post-pandemic global economy

[Douma]

Even as the robust post-pandemic rebound has been disrupted by the cost of living crisis and war in Eastern Europe, the Gulf region looks set to remain a relative bright spot for the global economy.

Projected gross domestic product (GDP) growth for the Gulf region as a whole in 2022 is close to 7%, while about 3.5% seems achievable even in 2023. For instance, Bahrain’s non-oil growth reached an 11-year peak of just over 9% year-on-year in Q2 and has been running at an annual 7.2% during the first three quarters.

These are strong figures by the current global as well as historical standards. While this strong performance owes a great deal to the recent oil market dynamics, there is more to the story.

The strength of the Gulf economy reflects the effective handling of the COVID-19 pandemic by the regional authorities who showed successful crisis management in terms of tracking infections, managing risks and rolling out vaccines.

This resilience has permitted an impressive rebound in economic activity. External connectivity has largely normalized, supported by the competent management of a growing tally of mega-events such as Dubai Expo 2020.

This has also enabled the Gulf to ramp up its efforts to develop strategically important outward-looking activities ranging from trade facilitation to tourism.

The Gulf countries are also well positioned for a pivotal role in the global energy transition. They are showing leadership in areas such as the circular carbon economy, while boosting efficiency across the oil and gas value chains. But at the same time, they are embracing the transition through national clean energy and net-zero targets.

The Gulf has repeatedly seen record-breaking solar energy investments while energy efficiency is emerging as a key driver of productivity. Green hydrogen presents considerable export potential, allowing the Gulf to capitalize on its empty spaces and ample solar radiation to enable the global fight against carbon emissions.

Increasing energy market integration within the Gulf and beyond is making clean energy exports possible. This would allow the regional countries to replicate their strategic role in oil and gas in energy provision more generally.

The growth momentum in the Gulf Cooperation Council (GCC) is underpinned by a strategic vision that is continuing to propel the diversification of the regional economy into new areas. Located at the heart of the Old World, the Gulf offers first-rate infrastructure, globally competitive regulations and a young, well-educated population. These factors are an important guarantor of economic dynamism, resilience and adaptability going forward.

The regional policy visions and development strategies depict a future underpinned by dynamism, productivity and innovation. To this end, substantial investments have been channeled for years into areas ranging from education and research to technology adoption and innovative start-up entrepreneurship, and they are accelerating further.

 

https://www.weforum.org/agenda/2023/01/gulf-region-post-pandemic-global-economy-davos-2023/