Higher oil prices coupled with improved global economic conditions are expected to support growth momentum of the GCC countries, said a report by Coface, a global leader in credit insurance providing cover to its clients in more than 200 countries.

The real GDP growth rates in the GCC are expected to hover around 2.3 per cent compared to 0.6 per cent in 2017. However, growth will remain below pre-2014 levels due to volatile energy prices and geopolitical uncertainties, stated Seltem Iyigun, Coface Economist for Middle East & Turkey, during her presentation on “GCC Economic Outlook” at the recent Key Broker Event organised by Coface Credit Insurance GCC at the Grand Sheraton Hotel, Dubai, UAE.

“We see a slight recovery in the growth momentum of GCC nations’ GDP on rising oil prices. The recent extension in oil production cut is a positive sign for oil price outlook in the near term, but prices remain volatile,” remarked Iyigun.

Oil prices have averaged $54 a barrel in 2017, up from $46 in 2016, and is expected to average at $57 in 2018.

It is expected that GCC countries will improve their fiscal performances or budget deficits this year. UAE maintained much better fiscal deficit compared to other GCC countries. The UAE was the only country in the region, which maintained its government gross debt during the last couple of years, said Iyigun.

Data from Coface GCC Economic Outlook shows that non-oil real GDP growth of most of the Gulf countries will improve in 2018 compared to 2017 except Bahrain and Saudi Arabia.

Iyigun pointed out that tighter liquidity conditions will remain in the region following the recent US Federal Reserve rate hike because regional currencies are pegged with the US dollar. However, loan growth is not expected in the next three years compared to 2012-2016 period.

According to her, the UAE’s high performing non-oil sectors are expected to drum up growth. The country’s private consumption will likely remain among the main drivers of growth in 2018.