The GCC will see its real GDP growth slow to 0.5 per cent in 2017 due to lower oil output, even as its non-oil growth rises on improved global conditions and slower fiscal reforms, according to new projections from the IMF.
“Growth prospects in the medium-term remain subdued amid relatively low oil prices and geopolitical risks,” the IMF’s latest GCC economic outlook report said.
The energy-exporting Arabian Gulf region’s growth has slowed this year from 2.2 per cent last year due to the low oil prices and some countries’ compliance with a global oil output cut that is trimming 1.8 million barrels of oil per day from the oversupplied market.
The agreement, which came into force in January, has been extended till the end of 2018, further dampening prospects for oil growth. Qatar, Saudi Arabia, Kuwait and the UAE are adhering to the oil curbs.
GCC countries are continuing to adjust to lower oil prices and substantial fiscal consolidation has taken place in most countries.
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World Bank lowers growth forecast for Arabian Gulf on oil cut adherence
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Non-oil GDP growth in some countries has slowed as governments implement fiscal consolidation reforms to bring down ballooning fiscal deficits caused by lower income from oil. The cumulative budget shortfalls in the region during 2018–22 are projected at about $160 billion, the fund said.
Growth in the non-oil sector is expected to increase by the end of this year as the pace of fiscal consolidation slows. Non-oil growth will rise to 2.6 per cent for 2017, up from 1.8 per cent last year, according to the report. Over the medium-term, non-oil growth is projected to hover around 3.4 per cent, half of the 6.7 per cent average growth rate achieved during 2000–15.
“While non-oil growth is recovering in some countries, medium-term prospects remain relatively subdued, highlighting the importance of accelerated efforts towards economic diversification and private sector development,” the fund said.
The projected growth is benefiting from a pick-up in global economic activity. Global growth is forecast at 3.6 percent this year and 3.7 percent in 2018, compared to 3.2 percent in 2016.
GCC countries should continue to focus on expenditure rationalisation, further energy price reforms, increased non-oil revenues, and improved efficiency of capital spending, the report said.
Governments in the region are introducing some reforms to shore up government revenue and cut expenditures, with varying degrees of implementation across countries.
The UAE and Saudi Arabia introduced this year an excise tax on energy drinks and tobacco at a rate of 100 per cent and on fizzy drinks at a rate of 50 per cent and both plan to levy a 5 per cent valued-added tax on January 1.
The fund estimates that revenue from these reforms, which will vary across countries, could generate 1.7 to 6.6 per cent of non-oil GDP by 2020 depending on each country’s reforms.
The introduction of VAT in the region could generate new revenue of 1.5-3 per cent of non-oil GDP, the fund said.
Policies should also aim to gear up banks to adjust to tighter liquidity situations so they can still support the private sector’s access to funding.
Most Gulf countries are raising interest rates, mimicking hikes in the US because of their currencies’ peg to the dollar. Only Kuwait links its dinar to a basket of currencies. With the US Fed predicting three interest rates hikes next year, the Gulf economies are set to face some problems as their economies are not aligned with the US.
The biog
Age: 59
From: Giza Governorate, Egypt
Family: A daughter, two sons and wife
Favourite tree: Ghaf
Runner up favourite tree: Frankincense
Favourite place on Sir Bani Yas Island: “I love all of Sir Bani Yas. Every spot of Sir Bani Yas, I love it.”
Seven%20Winters%20in%20Tehran
%3Cp%3E%3Cstrong%3EDirector%20%3A%3C%2Fstrong%3E%20Steffi%20Niederzoll%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Reyhaneh%20Jabbari%2C%20Shole%20Pakravan%2C%20Zar%20Amir%20Ebrahimi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
The specs
Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now
Destroyer
Director: Karyn Kusama
Cast: Nicole Kidman, Toby Kebbell, Sebastian Stan
Rating: 3/5
UAE release: January 31
The specs
Engine: 3.0-litre twin-turbo flat-six
Power: 480hp at 6,500rpm
Torque: 570Nm from 2,300-5,000rpm
Transmission: 8-speed dual-clutch auto
Fuel consumption: 10.4L/100km
Price: from Dh547,600
On sale: now
Joker: Folie a Deux
Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson
Director: Todd Phillips
Rating: 2/5
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if you go
The flights
Fly direct to Kutaisi with Flydubai from Dh925 return, including taxes. The flight takes 3.5 hours. From there, Svaneti is a four-hour drive. The driving time from Tbilisi is eight hours.
The trip
The cost of the Svaneti trip is US$2,000 (Dh7,345) for 10 days, including food, guiding, accommodation and transfers from and to Tbilisi or Kutaisi. This summer the TCT is also offering a 5-day hike in Armenia for $1,200 (Dh4,407) per person. For further information, visit www.transcaucasiantrail.org/en/hike/
Company%20Profile
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COMPANY%20PROFILE
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