GCC countries can expect their economies to rebound as they adjust to a new normal of lower oil prices and an expected resurgence in global economies, analysis from a Swiss bank has said.
According to the note from UBS Wealth Management, GDP growth for the GCC is expected to grow to 2.3% next year. They are also projected to grow by 0.6% this year.
“GCC countries are still adjusting to the new economic reality of lower oil prices, despite the recent recovery, while reform plans across the region are balancing the need for a more broad-based, diversified economy with respect for local traditions,” said Ali Janoudi, head of wealth management for Central and Eastern Europe, Middle East and Africa, France and Benelux International at UBS Wealth Management.
“We think the progress achieved so far brightens the region’s outlook.”
Currently, oil prices hover at $60 per barrel, though the Swiss bank warned that the prices are expected to go sideways next year, and further reforms are needed to diversify by GCC economies.
The report also pointed out that 2017 has been the strongest for the global economy since 2011, with GDP growth likely to rise to a high level of 3.8% from 3.1% in 2016.
Global growth is set to stabilize, the report claimed.
“Periods of high economic growth often sow the seeds of their demise, but there is little evidence today of an impending recession, which is historically caused by one or more of: capacity constraints, oil price shocks, excessively tight monetary policy, contractions in government spending, or financial crises,” said Mark Haefele, global chief investment officer at UBS Wealth Management.
“None of those look likely to materialize in 2018.”