MANAMA: Despite global economic uncertainties, prompted by lower oil prices, rising US interest rates, the Chinese slowdown and the lifting of Iran sanctions, GCC countries are better-placed than many parts of the world. They can expect continued strong, if slightly slower, growth going into 2016 according to a new ICAEW report.
Middle East Q4 2015 is produced by Cebr, ICAEW’s partner and economic forecaster. Commissioned by ICAEW, the report provides a snapshot of the region’s economic performance. In this quarterly review of the Middle East, ICAEW looks at the ‘game-changing’ global economic events of 2015 and how they affect the regional outlook for the coming years.
Lower oil prices are significantly changing public spending patterns across the region and households and businesses should brace themselves for fewer giveaways. A combination of diversification and drawing on financial reserves will allow oil-exporting GCC countries to continue their economic growth plans in the short term. However, strong performance down the line will require reconsideration of both public spending priorities and sources of government revenue.
The Bahraini Government no longer subsidises meat prices and similar measures are being implemented for fuel, electricity and water. The UAE has also eliminated fuel subsidies. Qatar has no immediate plans to either reduce subsidies or cancel funding of state-backed projects.
“It has been a tumultuous year for the global economy, and the GCC countries are not immune from these pressures. Global growth forecasts have been cut, but the economic diversification strategies of the GCC governments should see the Gulf States weather the slowdown better than other parts of the world. However they will need to continue to review sources of revenue and reassess their spending priorities,” Michael Armstrong, FCA and ICAEW Regional Director for the Middle East, Africa and South Asia (MEASA), said.
