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RIYADH: With the Arab states pushing forward with their financial diversification plans, consultants observing the geopolitical developments stay optimistic about the way forward for the Gulf area however warn that robust world and coverage headwinds persist.
Specialists assembled at a not too long ago concluded convention on the Arab Gulf States Institute in Washington, also referred to as AGSIW, acknowledged varied efforts undertaken by the GCC nations towards innovation however underlined the necessity to do extra.
“The GCC governments can’t relaxation on their laurels. They’ll should work laborious to maintain attracting prime corporations and extremely expert enterprise individuals, particularly these within the tech sector,” mentioned Robert Mogielnicki, a senior resident scholar at AGSIW, in an interview with Arab Information.
“This (already) appears to be the technique behind launching new long-term visa schemes and different initiatives to boost the livability and sustainability of varied areas,” he added.
The scholar believes the long run stays extremely unsure and fraught with dangers. “When your financial outlook continues to be carefully linked to world vitality market dynamics, issues can change for the more severe moderately rapidly,” he warned.
Sturdy place
Monica Malik, the chief economist at Abu Dhabi Industrial Financial institution who spoke on the convention, added that different challenges stay, reminiscent of balancing the social aspect whereas tightening fiscal coverage. One other problem is to create sufficient jobs and a labor market that meets the calls for of future economies.
Regardless of challenges forward, the GCC is in a robust place, agree most consultants.
For Malik, the GCC area managed the COVID-19 pandemic exceptionally effectively. “This was achieved with excessive vaccination charges and sustaining social mobility, with various restrictions, throughout regional nations.”
The GCC nations, she mentioned, are additionally effectively positioned with oil costs on the rise. “The GCC is coming into 2022 in a really robust means. There might be fiscal surplus, for many nations throughout the board even when oil costs fall to $75, except for Oman and Bahrain,” added Malik.
The economist expects these surpluses to assist construct reserves and assist transformation efforts. “We’re additionally going to see much less headwinds from the fiscal aspect. It’s not solely the pandemic (that acted as) a wake-up name but in addition the vitality transition (skilled in different nations),” she identified.
That is serving to in dashing up varied coverage reforms such because the value-added tax, which has been elevated and the UAE’s determination to introduce company taxes from subsequent 12 months. “The GCC area can also be specializing in the way it can turn into a pacesetter in vitality transition,” defined the economist.
Mogielnicki agreed that many regional governments are leveraging this fiscal leeway to introduce financial insurance policies, reminiscent of new or larger taxes — all these can assist financial diversification over the long term.
Digital economic system
He nonetheless emphasised that the government-led urgency to diversify into high-tech industries and develop the area’s digital economic system could not essentially be proportional to what world tech corporations and entrepreneurs want when contemplating relocating to the area.
Nevertheless, “financial prospects for the GCC look comparatively rosy, given the upper oil and fuel costs and — for essentially the most half — a sustained dedication to fiscal self-discipline,” concluded Mogielnicki.
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