Forbes Unveils Largest Arab Economy in 2021 

Forbes Middle East magazine chose Egypt as the third-largest economy in the Arab region, after Saudi Arabia and the United Arab Emirates, followed by Iraq and Qatar in fourth and fifth places, respectively.

According to the magazine countries were selected in line with their Gross Domestic Product (GDP).

Saudi Arabia retained first place in the list of the largest Arab economies for the year 2021, and expected that its gross domestic product at current prices would reach USD 804.9 billion by the end of this year, although its economy was affected by a double crisis represented by the coronavirus pandemic and the collapse of markets Oil, with a GDP of USD 701.5 billion in 2020.

The UAE came in second place in the Arab world, with a gross domestic product of USD 401.5 billion in 2021, compared to a value of USD 354.3 billion. Egypt came in third place, with a total output of USD 394.3 billion in 2021, and a total output of USD 361.8 billion in 2020.

Meanwhile, Iraq came in fourth place with USD 190.7 billion in 2021 and USD 172.119 billion in 2020, and Qatar maintained its fifth position this year as its gross domestic product will reach USD 166 billion this year, compared to USD 146.1 billion in 2020.

5 - Qatar

Qatar’s GDP declined by 2.6% last year due to the COVID-19, yet it is likely to recover, growing by 2.4% this year, which is a better level than the pre-pandemic year when it achieved a growth of 0.8% in 2019.

Qatar’s GDP per capita is the highest among the Arab countries due to its limited population. The country’s GDP per capita is expected to rise 13.5% to USD 59,000 in 2021, compared to USD 52,000 in 2020, and USD 62,900 before in 2019.

In March 2020, the Qatari government took measures to deal with the negative impact of the COVID-19 on the economy, announcing a financial package worth QR75 billion (USD 20.6 billion), or about 14% of GDP.

The package is aimed at shoring up small businesses and hard-hit sectors, including hospitality, tourism, retail, commercial complexes, and logistics. This program offered exemptions on utility payments like water and electricity. Logistics areas and small and medium industries were exempted from rent payments for six months. The measures were extended until September 2021.

4 - Iraq

The IMF expects Iraq’s GDP to begin a slow recovery this year, as it will grow by 1.1%, after it contracted by 10.9% in 2020, in comparison of a 4.5% GDP growth during 2019.

The COVID-19 and a sharp decline in oil revenues have exacerbated Iraq’s long-standing economic vulnerabilities and constrained the government’s ability to mount an effective fiscal response to the crisis.

The country’s oil production will continue to decline to 3.95 million barrels per day, compared to 4 million barrels per day last year and 4.6 million barrels in 2019.

Iraq’s GDP per capita is likely to rise by 7% to USD 4,600 this year, compared to USD 4,300 during the pandemic year, while it reported USD 5,700 in 2019.

Iraq ranks seventh among the Arab countries in terms of the GDP per capita this year, after Qatar, the UAE, Kuwait, Bahrain, Saudi Arabia, and Oman.

3 - Egypt

Egypt was well-armed with 2016 economic reforms while facing the COVID-19 crisis. The authorities could reach a balance between targeted spending to allocate expenditures in the health and social sector and achieve financial sustainability while rebuilding international reserves.

The GDP growth is expected to reach 2.8% in the FY 2020/21 and report 5.2% GDP growth in FY 2021/22, yet these expectations are marred by uncertainty, as Egypt is still vulnerable to shocks due to its high public debt and its overall financing needs.

The Egyptian government allocated USD 6.13 billion (EGP 100 billion), or 1.8% of the country’s GDP, to mitigate the economic impacts of the COVID-19, while pensions were increased by 14%, and targeted social cash transfer programs were expanded. In addition, the government launched an initiative to support informal workers in the most affected sectors. This initiative includes 1.6 million beneficiaries.

Egypt’s GDP per capita will continue its uptrend to USD 3,830 in FY2021, which ended on June 30, 2021. This represents an increase of 6.8%, compared to USD 3,580 last year and USD 3,000 in 2019.

Due to its high population, Egypt ranks ninth in terms of the GDP per capita in the Arab world after Qatar, the UAE, Kuwait, Bahrain, Saudi Arabia, Oman, Iraq, and Jordan respectively.

Egypt has agreed with the IMF on total financing of about USD 8 billion, including USD 2.772 billion through Rapid Financing Instrument (RFI) and USD 5.2 billion via Stand-By Arrangement (SBA).

2 - UAE

The IMF expects the UAE’s real GDP to grow by 3.1% this year, after a contraction of 5.9% year due to the COVID-19 pandemic. This year’s growth will be better than 2019’s performance before the pandemic, as the output grew by 1.7% in 2019 and 1.2% in 2018.

The UAE’s GDP per capita is likely to increase by 10% to USD 35,200 this year, compared to USD 31,900 last year, but the figure is still lower than the pre-COVID-19 rates of USD 39,200 in 2019. The Emirates is ranked second in the Arab world in terms of GDP per capita after Qatar, which topped the list this year.

"There is no doubt that the UAE has succeeded in dealing with the COVID-19’s two waves compared to other countries in the world. Also, the vaccines were administered so quickly that it became one of the world's leading countries in this matter," said Jihad Azour, Director of the Middle East and Central Asia Department at the IMF, at a conference in April.

Azour stated that the UAE's implemented plans to develop technology sectors would contribute in the medium term to persify the economy on the one hand and accelerate the pace of recovery on the other.

The UAE has allocated AED 32 billion (USD 8.7 billion), or 2.8% of its GDP, in financial packages to deal with the COVID-19 from the beginning of the pandemic until June 3, 2021.

1- Saudi Arabia

The reforms implemented by Saudi Arabia within the "Saudi Vision 2030" framework reflected positively on the economy and helped it overcome the COVID-19 crisis in 2020. The Kingdom’s reforms included boosting digital transformation activities, especially in the areas of governmental and financial services.

The IMF expects Saudi real GDP to grow by 2.4% this year, continuing the upward growth rate to 4.8% in 2022, after it witnessed a contraction of 4.1% in 2020.

The Kingdom’s real non-oil GDP growth recovered in the second half of 2020, and high-frequency indicators show that the rebound has continued in 2021. Non-oil growth is projected at 4.3% in 2021 and 3.6% in 2022, from a contraction of 2.3% in 2020.

Although Saudi’s GDP per capita is expected to hike by 12.5% to USD 22,700 this year, compared to USD 20,200 in 2020, it remains below the pre-pandemic levels, which amounted to USD 23,300 in 2019. The country’s population is currently more than 35 million.

The latest official data shows that unemployment among Saudi citizens decreased to 11.7% in the first quarter of this year, which is 0.1% lower than its level in the first quarter of 2020. The annual inflation rate increased by 5.7% in May, compared to the same month last year, yet it reached 5.3% in April 2021. The inflation figures still reflect the increase in value-added tax from 5% to 15%, which was applied in July 2020.

On March 20, 2020, Saudi Arabia announced a financial package to support the private sector worth SAR 70 billion (USD 18.7 billion), which represents 2.7% of the GDP.