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Middle East and Central Asia > Qatar

You are looking at 1 - 2 of 2 items for :

  • Type: Journal Issue x
  • Economic Development: General x
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Cover Policy Papers
Gulf Cooperation Council: Pursuing Visions Amid Geopolitical Turbulence: Economic Prospects and Policy Challenges for the GCC Countries
International Monetary Fund. Middle East and Central Asia Dept.
The Gulf Cooperation Council countries have successfully weathered recent turbulence in the Middle East, and their economic prospects remain favorable. Nonhydrocarbon activity has been strong amid reform implementation, although overall growth has decelerated due to cuts in oil production. The growth outlook is positive, as the envisaged easing of oil production cuts and natural gas expansion spur the recovery in the hydrocarbon sector, while the nonhydrocarbon economy continues to expand. External buffers remain comfortable despite current account balances having narrowed. Risks around the outlook are broadly balanced in the near term. More challenging medium-term risks, especially in the context of geoeconomic fragmentation and climate change, call for action on policy priorities to continue to strengthen the private sector and to diversify the economy.
Keywords:
economic diversification; financial stability; fiscal sustainability; GCC; productivity improvements; regional integration; GCC country; policy priority; B. GCC; GCC well; GCC public sector balance sheet; Labor markets; Fiscal rules; Total factor productivity; Global; Middle East; Middle East and Central Asia
Cover Staff Discussion Notes
Economic Diversification in the GCC: Past, Present, and Future
Mr. Tim Callen
,
Reda Cherif
,
Fuad Hasanov
,
Mr. Amgad Hegazy
, and
Padamja Khandelwal
Abstract: The economies of the six Gulf Cooperation Council (GCC) countries are heavily reliant on oil. Greater economic diversification would reduce their exposure to volatility and uncertainty in the global oil market, help create jobs in the private sector, increase productivity and sustainable growth, and help create the non-oil economy that will be needed in the future when oil revenues start to dwindle. The GCC countries have followed many of the standard policies that are usually thought to promote more diversified economies, including reforms to improve the business climate, the development of domestic infrastructure, financial deepening, and improvements in education. Nevertheless, success to date has been limited. This paper argues that increased diversification will require realigning incentives for firms and workers in the economies—fixing these incentives is the “missing link” in the GCC countries’ diversification strategies. At present, producing non-tradables is less risky and more profitable for firms as they can benefit from the easy availability of low-wage foreign labor and the rapid growth in government spending, while the continued availability of high-paying and secure public sector jobs discourages nationals from pursuing entrepreneurship and private sector employment. Measures to begin to address these incentive issues could include limiting and reorienting government spending, strengthening private sector competition, providing guarantees and financial support for those firms engaged in export activity, and implementing labor market reforms to make nationals more competitive for private sector employment.
Keywords:
SDN; export; firm; revenue; GCC country; private sector; Diversification; growth; exports; GCC; oil revenue; GCC economy; labor market; GCC immigration system; export quality; oil export; export product diversification; export sophistication; private sector employment; firm limit; GCC framework; Oil; gas and mining taxes; Export diversification; Service exports; Global