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KUWAIT CITY, April 27: The economic growth is declining in Kuwait this year at a much greater rate, to 1.5%, and that growth is also expected to slow in Qatar and Bahrain, to 2.7%, and that the economy of the Sultanate of Oman will grow by 2.6% in 2023, reports Al-Qabas daily quoting Reuters survey.
The agency said the situation of the countries of the region is no exception, as growth is also expected to slow in most major economies this year in light of the impact of raising interest rates on economic activity, along with the impact of high inflation on consumer demand.
However, inflation estimates for the Gulf countries were lower than their counterparts for many major economies. The inflation rate in the region is expected to range between 2.1% and 3.3% this year, and to decline below that in 2024. Most of the GCC economies are also expected to continue to enjoy double-digit current account surpluses in 2023 despite concerns about slowing oil production. Only Oman and Bahrain are expected to post single digit surpluses.
The survey indicated that the economies of the Gulf Cooperation Council countries will grow at a much slower pace in 2023 compared to last year, as their resources are affected by the decline in revenues from crude oil sales and production cuts. Oil prices have risen by about 20% since their decline to the lowest level this year at around $70 a barrel on March 20, mainly supported by the OPEC+ alliance’s decision to cut oil production by about 1.16 million barrels per day.
However, the prospects for achieving more gains will be greatly weakened in the coming months due to the slowdown in global demand, which is not good news for the GCC countries, which depend heavily on oil.
According to a poll conducted by Reuters from April 6 to 25, which included 16 economists, the economy of Saudi Arabia, the largest oil producer in the world, will grow 3.2% this year, less than half of its growth rate in 2022, which amounted to 8.7%. The growth rate is expected to be the same next year. James Swanston, emerging markets expert at Capital Economics, said: “Oil production cuts will lead to a sharp slowdown in GDP growth in Saudi Arabia this year and in the rest of the Gulf countries, the double whammy of reducing oil production and oil prices will affect oil and non-oil GDP.” In the UAE, the second largest economy among the GCC countries, economic growth is expected to slow to 3.7% in 2023 and 4.0% next year, much lower than the 7.6% recorded last year.