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GDP of GCC economies grows by more than double in '22 -- IMF

WASHINGTON, Nov 29 (KUNA) -- The International Monetary Fund (IMF) on Tuesday advised the Gulf Cooperation Council (GCC) countries to "maintain reform momentum, despite oil boom." Additional revenues from higher energy prices could help the region achieve long-term prosperity by maintaining the recent reform momentum.
"GDP growth for the GCC countries - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, is expected to more than double, reaching 6.5 percent in 2022," an IMF report said, a recent Policy Paper. Surging commodity prices have limited the spillovers from the war in Ukraine and the impact from tighter global financial conditions and have allowed for a more positive outlook for GCC economies.
Throughout its history, the GCC region has experienced distinct periods of rising oil revenues.
During those periods, countries deepened their dependency on oil and gas, increased wages and hirings in the public sector, expanded social safety nets, and ramped up capital expenditure. During 2002-08 and 2010-14 for example, the public sector wage bill increased by 51 and 40 percent, respectively.
"Our analysis suggests that GCC countries will save far more resources than during previous episodes because of the fiscal and structural reforms taken in the region," the report noted. In 2022 alone, the overall fiscal surplus will amount to over USD 100 billion, as the rise in expenditures - particularly on wages - remains contained so far.
While GCC countries have benefited from higher, albeit volatile, oil and gas prices, numerous risks still cloud the outlook - notably a slowdown in the global economy.
In this context, the reform momentum established in previous years should be maintained - irrespective of the level of hydrocarbon prices, the IMF urged. (end) rsr.gb