GCC economies are in good health with $43tn of liquid assets, while strong asset portfolios and low debt will help sustain growth, says Oliver Wyman consultancy.
“Factors such as fluctuating oil prices, ongoing replacement of fossil fuels and slow transformation of some economies has induced a general sentiment of Gulf economies reporting a slowdown in economic activity,” said a report by business consultancy Oliver Wyman. “On the contrary, the combination of such a strong portfolio of liquid assets and low debt levels are the key factors in the sustainability of Gulf economies.”
The most significant action taken by GCC states to boost their economies in the past few years is the roll-out of economic diversification programmes to wean them off oil, it said.
All six countries have a relatively high dependence on hydrocarbons compared to other global markets. According to an International Monetary Fund paper last June, average oil revenues for the region were close to 80 per cent of government revenues during 2000-2017, and oil exports amounted to 65 per cent of total exports over the period.
“Looking towards the future, GCC economies must take advantage of the valuable lead time they have to transform into post-oil economies, because fossil-fuel substitution will not happen as fast as many people believe it will,” said Pedro Oliver, regional head of the MEA (Middle East and Africa) region at Oliver Wyman.
The consultancy’s report, entitled The Arabian Gulf Economies: Asset rich, transforming and full of opportunities’, highlights other economic growth drivers in the GCC. These include widespread restructuring of the public sector, concerted efforts to develop FinTech (financial technology) and otherwise digitalise industries, modernisation of transport and construction, and growing tourism.