GCC States Have Overcome Big Obstacles

Al-Ittihad, UAE, November 18

It seems as if the Gulf Cooperation Council (GCC) countries are on their way to overcoming two major obstacles that limited their growth during the past two years. The first is COVID-19. GCC states have made rapid progress in vaccinating their residents, allowing them to restore important financial activity, such as tourism and travel, and boost their economies. For example, Emirates airline managed to decrease its losses in the first half of this year by roughly 54%. Similarly, the World Expo, hosted in Dubai, and the Dubai Airshow, brought thousands of visitors into the UAE. This was achieved to a large degree thanks to creative new measures such as the adoption of a unified Gulf vaccination certificate, similar to the one introduced by the European Union. Another obstacle that left its effect on the Gulf economies is related to the significant drop in oil prices last year, which led to severe budget deficits and the postponement of large projects in many Gulf states. However, recent data suggests that the recent rises in oil prices will have significant positive repercussions on economic activity in GCC countries, especially the increase in spending and the reduction of deficits. The Kingdom of Saudi Arabia already announced a significant decrease in its deficit in the second quarter of this year, coming down from 109 billion riyals in Q2 last year to 4.6 billion riyals in the same quarter this year. Similarly, the Kuwaiti budget deficit decreased by 94.5% in the first four months of the current fiscal year, according to the Ministry of Finance. The budgets of the rest of the GCC countries are expected to witness a similar shrinking in the deficit for the current year. All of this provides real hope for economic growth in the coming year, ranging between 3% and 4%. These developments provide a valuable opportunity for Gulf countries to avoid further difficulties in the event of sharp fluctuations in oil prices. Thus, GCC states can leverage these financial and health developments to revitalize their economies and bring them back to their pre-pandemic levels. This will be an incredible achievement that can be built upon for the coming years. – Mohammed Al-Asoumi (translated by Asaf Zilberfarb)