Leaving behind the impact of COVID-19 outbreak, GCC economies are poised for a strong rebound supported by accelerated efforts towards economic diversification, according to a recent MUFG research note.
Decade-old concept of GCC relying on oil and gas has led to overdependence on energy prices, an underdeveloped private sector and low productivity growth. The impact of pandemic on the regional economies is driving the region to a path towards a new economic model.
“This time is different’
“We are taking comfort that the “this time is different” mantra is bearing fruit – vigour of authorities to realise transformation strategies is gaining speed,” said Ehsan Khoman, Head of Emerging Markets Research – EMEA, MUFG.
Diversification will require patience given the scale of the structural shifts at hand, but impediments to investments and productivity is being reversed.
– Ehsan Khoman, Head of Emerging Markets Research – EMEA, MUFG
The MUFG report notes that the cyclical tailwinds stemming from robust vaccination programmes and ongoing re-openings of economies are offering the region the space for strong recovery. With the oil prices remaining firm, deficits are narrowing and funding flows are strong.