Gulf Cooperation Council: Pursuing Visions Amid Geopolitical Turbulence: Economic Prospects and Policy Challenges for the GCC Countries

Policy Papers, December 19, 2024

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The Gulf Cooperation Council countries have successfully weathered recent turbulence in the Middle East, and their economic prospects remain favorable.
Nonhydrocarbon activity has been strong amid reform implementation, although overall growth has decelerated due to cuts in oil production.
The growth outlook is positive as the envisaged easing of oil production cuts and natural gas expansion spur the recovery in the hydrocarbon sector, while the nonhydrocarbon economy continues to expand.
External buffers remain comfortable despite current account balances having narrowed.
Near-term risks around the outlook are broadly balanced.
More challenging medium-term risks—especially in the context of geoeconomic fragmentation and climate change—call for action on policy priorities to continue to strengthen the private sector and to diversify the economy.

Nonhydrocarbon sector: activity described as strong amid reform implementation.
Hydrocarbon sector: overall growth decelerated due to cuts in oil production; recovery expected from envisaged easing of oil production cuts and natural gas expansion.
External balances: buffers remain comfortable although current account balances have narrowed.
Risk assessment: near-term risks broadly balanced; medium-term risks heightened by geoeconomic fragmentation and climate change.

Continue reforms to strengthen the private sector.
Pursue economic diversification to reduce medium-term vulnerabilities.
Address policy priorities that mitigate risks from geoeconomic fragmentation and climate change.
Sustain and monitor external buffers and current account dynamics.

Subject: Fiscal policy, Fiscal rules, Labor, Labor markets, Production, Total factor productivity
Keywords: B. GCC, economic diversification, financial stability, Fiscal rules, fiscal sustainability, GCC, GCC country, GCC public sector balance sheet, GCC well, Global, Labor markets, Middle East, Middle East and Central Asia, policy priority, productivity improvements, regional integration, Total factor productivity