Dubai: The UAE and Saudi Arabia will lead the gradual pick-up in GDP growth led by non-oil economic activity, according to Economics team at the Abu Dhabi Commercial Bank (ADCB).
ADCB economists see aggregate real non-oil GDP growth strengthening to 2.6 per cent in 2020, up from an estimated 2.1 per cent in 2019 and 2 per cent in 2018, report agencies.“We see Saudi Arabia and UAE as largely driving the acceleration in non-oil GDP growth in 2020, despite being at different stages in their economic cycles. Saudi Arabia should benefit from building momentum with its investment programme, whilst UAE is forecast to get a boost from hosting Expo 2020,” said Monica Malik, chief economist of ADCB.
While there is some pick-up in investment activity in Oman, Kuwait is expected to see stronger manufacturing activity with new refining capacity coming onstream. In the case of Bahrain, GCC support for investments will remain a key support to economic activity. Within the GCC, Saudi Arabia is at an early stage in its multi-year diversification programme, with much of the funds in place for the first phases of the investment plans.
“We believe the investment programme will take time to build traction, with most of the rise in Saudi project awards in 2019 linked to hydrocarbon projects. We also expect to see a pick-up in investment activity in the UAE in 2020 – there are signs of momentum building in Abu Dhabi, despite a fall in project awards in 2019,” said Thirumalai Nagesh, an economist at ADCB. During the current year Dubai is expected to see greater implementation of projects to finalise infrastructure in Dubai in the first half of 2020 ahead of Expo 2020, both direct and indirect. Stronger project awards are expected in Abu Dhabi in 2020.
Analysts expect to see the potential for a meaningful pick-up in private consumption in the UAE with Dubai hosting Expo 2020, albeit temporary. This should lead to a rise short-term employment and visitor numbers linked to the event in 2H2020.
The ability to raise government spending – a key driver of domestic demand in the GCC. “We expect to see some increase in government spending on wages and salaries, albeit at a more moderate rate than over the past two years.