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NewsWorld Bank lowers growth forecast for Gulf economies in 2023

World Bank lowers growth forecast for Gulf economies in 2023

In its latest report, the bank explained the reasons for the drop in its forecast for the current year with the drop in the gross domestic product of hydrocarbons, which is expected to contract by 1.3% in 2023, after announcing a reduction. production volunteer in the OPEC Plus alliance. last April and the slowdown in global economic growth.

On the other hand, the bank underlined that the strong growth of the non-oil sectors, which is expected to reach 4.6% in 2023, will reduce the impact of the declines in the activities of the hydrocarbon sector on growth, mainly due to the accelerated growth of private consumption and fixed investment and the financial and economic reforms adopted by the governments of the countries of the region

According to the World Bank, structural reforms carried out in recent years will support growth rates this year, as well as improvements in the business climate and competitiveness, and general improvements in the level of women entering the fields of work. in Gulf Cooperation. Council countries, particularly the Kingdom of Saudi Arabia, have delivered the desired returns, with the Bank’s call to redouble efforts to achieve the desired economic diversification.

The bank’s report, titled “The Health and Economic Burden of Non-Communicable Diseases in GCC Countries,” focused on a new aspect of the challenges it says affect the region’s economy. It is the leading cause of death and disease, as it is responsible, according to the Bank, for 75% of deaths and disabilities in the region.

Of reported deaths and disabilities, more than 80% are due to just four major categories of non-communicable diseases, namely cardiovascular diseases, diabetes, cancer and respiratory diseases.

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

This study also showed the indirect costs on the economies of these countries, through its negative impact on human capital. According to the study, the cost of labor productivity losses alone in the GCC economies s amounted to more than $80 billion in 2019, and with the aging of the population, the prevalence of non-communicable diseases, the World Bank expects these costs to increase in the future.

To mitigate these costs to economies in the region, the Bank called for accelerating the treatment of the underlying risk factors that cause these diseases in the first place, such as modifiable behavioral risks such as poor diet, lack of exercise, smoking and sugar consumption.

As for environmental risk factors, they are represented, for example, in air pollution, the levels of which in the countries of the Gulf Cooperation Council exceed the average rates recorded in most countries of the Cooperation Organization and economic development.

The World Bank said that many GCC countries have already taken strong measures to address the above risk factors, including imposing taxes on tobacco products, smoke and sugary drinks, restricting or banning the advertising, promoting or sponsoring tobacco and smoking products, and reducing the amount In the area of ​​food, many of these countries have also set important environmental targets.

“There is an opportunity to do more to reduce non-communicable diseases and their costs in the future,” said Issam Abu Suleiman, regional director of the Gulf Cooperation Council Department at the World Bank.

The Bank’s report stresses that effectively addressing the health and economic burden of non-communicable diseases requires a comprehensive approach at government level, a strategic focus on prevention, targeting young people and adolescents, and the development and the implementation of procedures and response activities at the level of many sectors based on evidence and evidence with Given the relevant context, government agencies should cooperate now to reduce the risk of non-communicable diseases to the future.

Regarding the prospects for economic performance of the GCC countries, the bank published in its report the following forecasts:

Saudi Arabia

Following the significant increase in GDP of 8.7% in 2022, the Bank expected economic growth to slow to 2.2% in 2023 and oil sector GDP to decline by 2%, considering given Saudi Arabia’s commitment to voluntarily reduce production. agreed within the OPEC Plus coalition.

With oil prices remaining at relatively high levels, the bank expects accommodative fiscal policy and high growth rates in private credit activity to mitigate the slowdown in the oil sector. As a result, the non-oil sectors are expected to experience growth rates of 4.7% in 2023.

The bucket

In its report, the World Bank expects economic growth to slow this year to 2.8% due to the drop in global economic activity, the contraction in oil production and the tightening of public finances. Weak oil activities, supported by strong domestic demand, particularly in the tourism, real estate, construction, transport and manufacturing sectors.


The bank expects economic growth to slow to 1.3% in 2023 in response to the OPEC Plus alliance’s more cautious production approach and slowing global economic activity. Consequently, the oil sector is expected to contract by 2.2% in 2023, despite the recent establishment of the Al-Zour refinery.

The bank also expects the non-oil sectors in Kuwait to grow by 4.4% in 2023, mainly due to private consumption, but political uncertainty resulting from the political stalemate will undermine the implementation of new infrastructure projects, as planned by the bank.


The World Bank estimates that real GDP will decline to 3.3% in 2023, after the strong performance recorded in 2022, and the expansion project in the northern field should improve the performance of the hydrocarbon sector in the medium term once the field will come into effect. The bank expects strong growth this year in the non-oil sector of up to 4.3%, driven by the recovery in private and public consumption.

the Sultanate of Oman

The Bank estimates that the Omani economy will continue to grow, but at a slower pace, driven mainly by the acceleration of the implementation of structural reforms under Vision 2040, and the overall growth rate is expected to decline to 1.5% in 2023. due to lower global demand.

As a result, the bank expects the hydrocarbon sector to contract by 3.3% due to recent production cuts by the OPEC Plus alliance, and at the same time the non-oil economy is expected to continue. on the road to recovery, reaching growth rates of 3.1%. percent in 2023 and will support this Accelerating the supply of resources for infrastructure projects, increasing industrial capacities from renewable energy sources and the tourism sector.

the two seas

The bank said that Bahrain’s economic prospects depend on the future of oil markets and the results of the acceleration of the implementation of the structural reform program under the program to achieve balanced public finances after its amendment, and therefore the bank expects the growth rate to fall to 2.7% in 2023, and average growth to reach 3.2% over the period 2024-2025, with continued control of public finances .

However, the bank expects growth in the hydrocarbons sector to contract by half a percentage point this year, provided the non-oil sector continues to grow by 3.5%, supported by a recovery in the tourism and service sectors and the continuation of infrastructure projects. .

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Arab Desk
Arab Desk
The Eastern Herald’s Arab Desk validates the stories published under this byline. That includes editorials, news stories, letters to the editor, and multimedia features on easternherald.com.

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