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A new report by the Institute of Chartered Accountants in England and Wales (ICAEW) suggested a marginal improvement in GCC GDP growth in 2019. According to the report, the GCC is expected to post an economic growth of 2.3 percent in 2019, up 0.3% from 2018, with the main source of growth coming from the non-oil sector.
In spite of measures to diversify GCC economies, oil continues to dominate market dynamics, currently 46% of total GDP. Lower oil prices are expected to impact the oil sector and lower prices in 2019. Meanwhile, the non-oil sector in the GCC is expected to be the primary engine of growth in 2019, supported by higher government spending, notably in the UAE and Saudi Arabia.
The report noted that economic activity in the UAE is set to accelerate to 2.2% in 2019, up from an estimated 1.7% in 2018, mostly due to a pick-up in non-oil activity, rising public spending, higher investment ahead of Expo 2020 and continued regional economic recovery.
The report added that the economic outlook for Saudi Arabia is estimated to grow at 2% in 2019, on the back of record budget spending and various pro-growth government initiatives ensuring faster expansion of non-oil activity, even as oil sector growth slows. Hiring activity in Saudi Arabia remains subdued, which could impact job growth numbers in line with Saudi’s Vision 2030 goals.
Michael Armstrong, ICAEW regional director for the Middle East, Africa and South Asia (MEASA) said: “The UAE has done a tremendous job in implementing much needed economic reforms in its aim to diversify the economy and achieve its Vision 2021 goals. Large-scale projects in preparation for Expo 2020, new visa rules, expansionary budgets and various pro-growth government initiatives are expected to contribute to the overall growth of the economy in 2019. The predicted growth of the non-oil sector underscores the UAE’s ambitious economic transformation agenda.”
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