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GCC expected to record a high growth rate this year

AMF has warned about rising inflation for the rest of the year, which is expected to impact the growth

[Source photo: Anvita Gupta/Fast Company Middle East]

The Arab Monetary Fund (AMF) has said that the Arab economies will experience exponential growth this year. According to the Arab Economic Outlook Report by AMF, factors like rising oil prices increased production for Arab oil-exporting countries, and the ongoing reforms to promote growth will help boost the regional growth rate to 5.4% in 2022.

Compared to the rate of 3.5% at which the economies in the region grew in 2021, the current growth rate is phenomenal. It also states that the GCC countries are set for a growth rate of 6.3%, compared to 3.1% in 2021.

However, AMF expects this spike to settle next year, and the Arab economy is expected to grow at 4%, while the growth in GCC countries will be limited to 3.7% in 2023. This decline could be linked to the slowing global economic growth, increasing commodity prices, and gradual exit from expansionary fiscal and monetary policies.

AMF has warned the countries that the increasing local and global inflation will also impact the regions’ inflation rates. The report cites challenges in the global supply chains and increased concerns about global food security due to the increased commodity pricing that could stall global growth. The inflation rate in Arab countries is expected to reach 7.6% in 2022 and 7.1% in 2023, as per the report.

The report also talks about how the other Arab oil exporters will benefit from factors like increased production quantities within the OPEC+ agreement and a rise in global oil prices. This is expected to result in a 4.6% growth rate in 2022, and, like other economies, it will come down to 3.9% next year.

Earlier, IMF had made similar predictions and said that the leading economies in the region, like Saudi Arabia, would grow at a staggering pace. It said that while the top global economies might fail to deliver, increased oil prices, efficient COVID-19 management, governmental reforms, and a stimulus to counter inflation will continue to drive growth in this region. 

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