'No better time than now' for GCC to foster non-oil growth

A new non-oil economic bloc is taking shape in Gulf Co-operation Council countries, as the six member states prepare their economies for future challenges, from climate change to cybersecurity, a senior official said.

Economic growth in the GCC over the next 15 years will be led by the private sector in a regionally and globally connected marketplace, Nayef Al Hajraf, Secretary General of the Co-operation Council for the Arab States of the Gulf, said on Wednesday. "The role and influence of the governments in the GCC economies is changing from building and creating the economy, to incentivising the growth of the economy and enabling the private sector to lead the growth," Mr Al Hajraf said at event hosted by the Harvard Business School Club of the GCC in Dubai. "Core to this understanding is the integration of the GCC economies."

He said important factors were mobility of talent, capital and materials to foster growth and improve links between the member countries. Non-oil economic growth in the GCC is forecast to remain strong at 4.5 per cent this year, supported by an increase in public spending, according to the Institute of International Finance.

Higher oil prices seen this year will boost economic activity through more government spending and an expansion of liquidity in banking systems in the economic bloc, it said. "A new economic bloc is currently taking shape in the world and that is the new non-oil GCC economic bloc," Mr Al Hajraf said. "We see it taking shape in the GCC as we speak. "Our role today is to support this transformation with the policies and initiatives that are necessary for it to flourish."

The GCC is moving towards more integration within the bloc and better relations with other countries to unlock future growth, he said. Mr Al Hajraf was speaking at the HBS event titled Crossroads: The GCC Future Impact Forum.

Speaking on the theme of preparing GCC economies for the next 50 years of growth, he said the journey "will not be a challenge-free ride". Food security, energy supply, sustainable economic growth, cyber-security, terrorism threats and climate change will be among the key challenges, he said. However, he said the opportunities ahead should not be underestimated.

The GCC economic agenda includes a focus on human capital investment, transportation, trade, health care, tourism, education, energy, AI, the Fourth Industrial Revolution and SMEs. These are "examples of what we can do together to capitalise on such great opportunities and to grow together", Mr Al Hajraf said.

Sustainable development goals are an integral part of member states' growth plans. "GCC countries are well-positioned in the global development index, with the focus to include sustainability in all sector strategies, across government agencies and initiatives," he said.

The 41-year-old bloc is also playing an important role in maintaining stability, peace and security. “The GCC is showing a great ability to deal with challenges and threats as well as maintaining its stabilising role in the region and the world,“ Mr Al Hajraf said.

The GCC is also playing a key role in stabilising energy markets as oil and gas prices surge, exacerbated by Russia’s war in Ukraine, which fed existing inflation. “Today the GCC remains resilient and plays a constructive role within the international community," he said. "Today the GCC contributes greatly to the world economy not only by maintaining an undisrupted supply of energy, but also to stabilise world energy markets."

GCC member states produce about a quarter of crude oil globally and account for about 40 per cent of the world's oil reserves. The GCC holds the world's second biggest natural gas reserve and is the third biggest producer of LNG globally.

Global economic uncertainty is looming amid shrinking growth, supply chain disruptions, rising interest rates and inflation. "It is the greatest economic challenge we are all facing that requires collective effort to address and a great deal of co-operation to mitigate," Mr Al Hajraf said.

"We are working at the GCC to strengthen our economic co-operation through a number of free trade agreements with other countries to enhance and serve our private sector."

AI, the Fourth Industrial Revolution and renewable energy will be harnessed as the bloc develops, he said. "A common objective will be seen as the road map for the fifth decade of the GCC journey, highlighting economic integration, human capital development and maintaining collective security and prosperity," Mr Al Hajraf said. "We need to believe in our collective effort, we need to fulfill our moral obligations towards future generations. So let us wait no more, there's no better time than now as the future is here."