Video|4 July 2024
MENA – Output expansion slows for Saudi and the UAE
John Payne
Senior Economist, EMEA Macro Consulting
Output expansion slows for Saudi and the UAE
In June, non-oil PMIs indicate slowing growth in Saudi Arabia and the UAE, while Qatar’s output surged to its highest since July 2022. We foresee GCC non-oil GDP growth holding at 4.2% this year, with a slight uptick to 4.3% next year.
Saudi Arabia attracted 9.5bn Riyals in FDI in Q1, with reduced outflows and a low unemployment rate of 3.5%, marking strides towards Vision 2030 goals.
Turkey saw inflation decline for the first time in over a year to 72%, with expectations of further improvement below 45% by year-end. The MPC maintained rates, balancing inflation concerns with economic slowdown.
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For Gulf cities, the near-term outlook will be tied not only to the global macroeconomic backdrop, but also the progress of the diverse visions and strategies in the region. With the aim to diversify their economies and reduce the dependence on oil, Gulf states continue to invest in the non-oil economy and implement various reforms. That said, oil revenues remain key to funding diversification efforts.
The military escalation between Iran and Israel has ratcheted up fears of an expanded Middle East conflict. The threat of counter strikes by Israel is clearly heightened, but we think both sides will ultimately seek to avoid a costly all-out war.
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