The Cooperation Council for the Arab States of the Gulf, also known as the Gulf Cooperation Council, is a regional, intergovernmental, political, and economic union comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
Country: Kingdom of Saudi Arabia (KSA)
Debt as a percentage of GDP: 30.02%
The fiscal breakeven oil price: USD 67 per barrel
- Saudi Arabia has the largest economy in the Middle East and the 18th largest in the world.
- Saudi Arabia has the world's second-largest proven petroleum reserves, and the country is the largest exporter of petroleum.
- It also has the fifth-largest proven natural gas reserves. Saudi Arabia is considered an "energy superpower".
- It has the second highest total estimated value of natural resources, valued at US$34.4 trillion in 2016.
- Saudi Arabia's command economy is petroleum-based; roughly 63% of budget revenues and 67% of export earnings come from the oil industry.
- It is strongly dependent on foreign workers, with about 80% of those employed in the private sector being non-Saudi.
- Challenges to the Saudi economy include halting or reversing the decline in per-capita income, improving education to prepare youth for the workforce and provide them with employment, diversifying the economy, stimulating the private sector and housing construction, and diminishing corruption and inequality.
- The oil industry constitutes about 45% of Saudi Arabia's nominal gross domestic product, compared with 40% from the private sector. Saudi Arabia officially has about 260 billion barrels (4.1×1010 m3) of oil reserves, comprising about one-fifth of the world's proven total petroleum reserves.
Debt as a percentage of GDP: 58.40%
The fiscal breakeven oil price: USD 44/barrel
- The country has a high standard of living for its legal citizens. With no income tax, Qatar (along with Bahrain) is one of the countries with the lowest tax rates in the world.
- As of 2016, Qatar has the fourth highest GDP per capita in the world, according to the International Monetary Fund.
- It relies heavily on foreign labor to grow its economy, to the extent that migrant workers compose 86% of the population and 94% of the workforce.
- The economic growth of Qatar has been almost exclusively based on its petroleum and natural gas industries, which began in 1940. Qatar is the leading exporter of liquefied natural gas.
Country: United Arab Emirates
Debt as a percentage of GDP: 38.26%
The fiscal breakeven oil price: USD 64/barrel
- It is the 6th wealthiest country in the Middle East after Iran, Saudi Arabia, Israel, Turkey, and Egypt.
- It is the second-largest economy in the GCC (after Saudi Arabia).
- Source of revenue: extraction of crude oil and natural gas, wholesale and retail trade, repair services, real estate, business services, construction, manufacturing
The Current Economic Situation in GCC Countries:
- The GCC countries are slowly recovering from the shock of COVID-19 and its impact on uncertainty from geopolitical tensions, a global energy crisis, continued supply chain disruption, financial market volatility, food insecurity, and the global economic slowdown.
- Increased demand for oil has resulted in Rising oil prices have certainly contributed to the surplus in cash.
- Increase in unemployment and high cost of living
- Increase in Inflation
- High Cost of Borrowing
- Economic growth in the GCC remains solid due to the monetary and fiscal policies of the governments, which resulted in:
- Sufficient liquidity in the financial system in the face of subdued demand for credit
- The fiscal stimulus injected into the economy (albeit less than warranted) and
- High oil and natural gas prices are allowing for continued government spending.
- GCC’s economic diversification is urgent considering their reliance on oil sales revenues and predictions of declining global oil demand. GCC countries have been focusing on attracting foreign investment, promoting tourism and technology, and developing various industries as part of the diversification of economic activities.
- Each nation has included a specific year in the heading of its unique vision or plan in an effort to meet the target date for achieving its economic and developmental goals: Qatar’s National Vision 2030, We the UAE 2031, Saudi Vision 2030.
- Fear of recession in 2023 resulted in a wait-and-watch approach by GCC countries.
- The collapse of many corporations in GCC countries due to mismanagement, a lack of qualified personnel to manage the affairs, wrong investment decisions, Debt burden etc.
- Supply chain disruptions due to geopolitical tensions
- Microeconomic factors such as supply and demand, consumer preferences, production costs, market structure, purchasing power, competition, wages, employment levels, skill availability, technological developments, etc.
- Macro-economic factors such as GDP, unemployment, interest rates, inflation, currency rates, trade balance, fiscal and monetary policy, business cycle, consumer confidence and sentiments, global political environment, FDI, etc.
- Focus on localization, a threat to expatriate skilled labor
- Implementing the "country first approach"
Although the region will not be completely immune to a global slowdown, there are a number of reasons to be optimistic. Oil prices are likely to sustain US$75–95 per barrel levels in the coming year. High oil prices also enable GCC governments to support the economy. This provides fiscal headroom for governments to sustain aggregate demand through spending. The resurgence of the non-oil economy has resulted in all-round economic growth. A wise investment decision, optimal utilization of resources, the right people for the right job, etc. will take the economy in the right direction.
