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publication October 23, 2020

GCC Countries Outlook — October 2020

The October 2020 MENA Economic Update report image features a globe in the background and the title of the report: Trading Together — Reviving Middle East and North Africa Regional Integration in the Post-COVID Era.

Bahrain: Bahrain’s economy is expected to contract in 2020 due to lower international oil prices and the spread of COVID-19. Fiscal and external deficits are expected to rise sharply in 2020, reversing the narrowing path observed in 2019.

Kuwait: While performance in 2020 will suffer from the twin shocks of COVID-19 and the oil price slump, Real GDP in Kuwait is now expected to contract by 7.9% of GDP in 2020 (compared to -5.4% forecasted in June 2020) as non-oil GDP growth is subdued by protracted public health measures and the constrained fiscal mitigation measures. Oil revenues in Kuwait declined by 16.6% on the back of a 10.3% fall in oil prices and a 2.2 % reduction in oil output. Non-oil revenues fell too due to weak economic activity.

Oman: The economy is projected to sharply contract by over 9% in 2020, owing to depressed global demand for oil and the pandemic hit to the non-oil sector. The non-oil economy also faces significant pressure amid ongoing restrictions, with tourism and hotel sectors among the hardest hit. If conditions ease, growth in Oman is projected to gradually pick up to an average of 4% in 2021-22.

Qatar: Qatar’s Real GDP is projected to contract by 2% in 2020 which has been mitigated by infrastructure spending ahead of the FIFA World Cup in 2022, continued expansion of LNG capacity, and fiscal accommodation. Steps taken to improve the business environment, as well as the final push ahead of the World Cup, are expected to underpin growth in the medium term for Qatar.

Saudi Arabia: COVID-19 and lower oil production levels and prices are weighing heavily on the Saudi Arabian economy and fiscal position, despite sizable fiscal and monetary mitigation measures. The 2020 outlook remains very weak with medium-term recovery dependent on global economic rebound and eventual containment of the pandemic.

United Arab Emirates: In the UAE GDP is projected to contract in 2020 due to COVID-19 and lower oil production. Dependent on the speed of global recovery, growth is expected to reach 2.5% by 2022, supported by government recovery plans, higher oil revenues, and a boost from Dubai Expo2021.