July 20, 2024

With a staggering $43tn of Liquid Assets GCC economies are in stable health

  • According to Oliver Wyman Consultancy, the strong and better asset portfolios, as well as low debt, will support them to have sustainable growth.
  • The GCC economies of the Arabian Gulf are very well placed for achieving sustainable growth in the upcoming years, all due to their low debt-to-gross domestic product ratios, a vast portfolio of liquid assets as well as strategies to diversify all their economies away from Oil and Gas sector.

According to a report by business consultancy Oliver Wyman, “Factors like Fluctuating Oil prices, current replacement of fossil fuels, and the slow transformation of some economies has induced a general sentiment of Gulf economies reported a slowdown in economic activity.”

“On the contradiction, a combination of a stronger portfolio comprising of liquid assets and low debt levels are key factors in the sustainability of Gulf economies in the long run.”

According to the recent report, “The Gulf cooperation council-comprising of the UAE, Saudi Arabia, Kuwait, Bahrain, Oman, and Qatar- have a combined $43.7 trillion (Dh160.48tn) in liquid assets and quasi-liquid assets (including $3.3tn in sovereign wealth funds and $40.4tn in proven oil and gas reserves). It thus equates to $841million assets per capita in the region.”

The GCC states the most significant action for boosting their economies during the past few years is by rolling out economic diversification programs weaning them off the Oil, as indicated in the report.

All six countries have a comparatively high dependence on hydrocarbons compared to different world markets. According to International Monetary Fund paper published last June, average oil revenues for the region were nearly close to eighty percent of state revenues throughout 2000-2017, and oil exports amounted to sixty-five percent of the total exports during the period.

However, the dependence level varies between countries – within the UAE, hydrocarbons structure make up around forty-three percent of their total GDP, one in the bottom levels within the GCC.

In the UAE – additionally, like Saudi Arabia, Bahrain as well as others – governments are operating to change revenue streams, increase foreign possession and facilitate the creation of new newer private sector businesses to grow and diversify their economies.

For illustration: – Underneath a GCC-wide agreement in 2017, the six countries are all introducing a five percent VAT on bound specific merchandise and services. The UAE and Saudi Arabia were the primary to try and do this last year, followed by Bahrain in 2019.

Meanwhile, the UAE this Tuesday had declared an inventory of 122 economic activities across thirteen business sectors, wherever one hundred percent foreign ownership is allowable. Previously, external house owners might solely only hold to forty-nine percent of a corporation registered within the UAE unless it had been among a delegated free trade zone.

“Looking towards the long run, GCC economies should profit of the precious lead time, they need to rework into post-oil economies, as a result of fossil-fuel substitution won’t happen as quick as many of us believe it’ll,” as stated by Pedro Oliver, regional head of the MEA (the Middle East and African) region at Oliver Wyman.

The consultancy’s report, entitled The Arabian Gulf Economies: plus wealthy as well as Asset affluent, transforming and filled with opportunities’, highlights different economic process drivers within the GCC.

These embrace widespread restructuring of the general public sector, joint efforts to develop FinTech (financial technology) and otherwise digitize industries, improvement of transport and construction, and growing the tourism sector.

Within the same time, the GCC contains a comparatively young population, that is being upskilled to contribute to the workforce within the years ahead. The overall increment will increase internal consumption and support GDP growth, as the report stated.



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