World Bank Expects GCC Economies to Grow at Slower Pace on Lower Energy Revenues, Global Crises

The World Bank expected the economies of the Gulf Cooperation Council (GCC) countries to grow at a slower pace in 2023 compared to the previous year due to the decline in oil and gas revenues and the slowdown in global economic activity.

According to the new World Bank report on the latest economic developments in the Gulf region, titled "The Health and Economic Burden of Non-communicable Diseases in the GCC Countries", the cooperation's economy is expected to grow at a rate of 2.5%. in 2023 and 3.2% in 2024 compared to a remarkable growth during 2022 of 7.3%, due to the strong increase in oil production during most of that year.

The reason for the weak performance is primarily due to the decline in hydrocarbon GDP, which is expected to contract by 1.3% in 2023 after the announcement of the OPEC+ production cuts in April 2023 and the global economic slowdown.

However, strong growth in the non-oil sectors, which is expected to reach 4.6% in 2023, will reduce the inefficiencies in hydrocarbon activities, mainly due to private consumption, fixed investment and fiscal easing in response to relatively higher oil revenues in 2020. 2023.

The World Bank indicated in the report that the structural reforms undertaken in the past few years have supported very modest growth rates this year. Improved business climate and competitiveness, and general improvements in women's labor force participation in the GCC countries, particularly in Saudi Arabia, have yielded the desired returns, although more efforts are needed to achieve the desired diversification.

The report also indicates that non-communicable diseases have become the leading cause of death and morbidity, accounting for nearly 75% of all deaths and disabilities in the region. Of the reported deaths and disabilities, more than 80% are due to just four major categories of non-communicable diseases: cardiovascular diseases, diabetes, cancer and respiratory diseases.

The report also highlights the significant cost of non-communicable diseases to the GCC economies. A recent study published in the Journal of Medical Economics, a collaborative effort between experts at the World Bank and key stakeholders from across the GCC countries, estimated the direct medical costs of seven diseases. major non-infectious diseases, estimated at $16.7 billion in 2019 alone.

In addition, non-communicable diseases also impose significant indirect costs on the economies of these countries, through a negative impact on human capital. The cost of labor force productivity losses alone in the GCC economies amounted to more than $80 billion in 2019. With population aging and non-communicable diseases prevalent, these costs are expected to increase in the future rather than decline.