Gulf Economic Update, December 2024

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - The GCC economies are experiencing a contraction in the oil sector due to OPEC+ production cuts, while non-oil sectors show resilience with a projected GDP growth of 1.6% in 2024, accelerating to an average of 4.2% in 2025-2026 [32][35] - Water scarcity is a critical challenge for the GCC, necessitating innovative solutions such as desalination and demand management strategies to ensure sustainable water supply [26][42] Summary by Sections Recent Developments - GCC economies are heavily influenced by global energy markets, with a significant contraction of 7.5% in oil GDP in H1 2024, while non-oil GDP grew by 3.8% [32][35] - The UAE leads in economic diversification, with strong growth in financial services and logistics, while Saudi Arabia's Vision 2030 is driving investments in tourism and renewable energy [32][35] Spotlight Section - The GCC faces urgent water management challenges due to arid climates and rapid population growth, with water-dependent sectors contributing significantly to GDP [42][43] - Strategic investments in water efficiency and technology are essential for economic diversification and resilience [42][43] Outlook and Risks - GCC fiscal balances are expected to remain in deficit in 2025-2026 due to OPEC+ production cuts and low oil prices, with varying impacts across countries [32][35] - Inflation in the GCC is projected to average 2.1% in 2024, influenced by housing price pressures and monetary policies [32][35] Special Focus - Water security is vital for economic stability, with the GCC region being one of the most water-scarce globally, relying heavily on non-renewable groundwater and energy-intensive desalination [42][43] - The report emphasizes the need for integrated water resource management and public-private partnerships to address fiscal pressures and improve service delivery [42][43]