GCC Drives Middle East-North Africa Growth in 2014 with Mega-Project Spends

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The Gulf Cooperation Council (GCC) countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) will continue to drive investment in the Middle East-North Africa (MENA) region, mainly through heavy infrastructure spending, according to a Qatar National Bank (QNB) report. The GCC had an estimated gross domestic product (GDP) growth of 3.7% in 2013. Investment in major infrastructure programs will continue to drive trade openness through higher imports, according to the bank report.

Estimated large project expenditures for 2014 in the region will include $30 billion in Qatar and $24 billion in Kuwait. Dubai's successful bid for the World Expo 2020, and a range of new real-estate developments, will drive project spending in the UAE. The Saudi government will spend more than $50 billion on infrastructure projects, excluding significant project spending by the private-sector and state-owned companies.

Outside the GCC, growth in the MENA region will depend on overcoming political uncertainties, liberalizing trade and improving competitiveness, according to the QNB. Further structural reforms, aimed at attracting foreign investment into infrastructure, education and innovation, would yield long-term gains in enhancing trade openness and competitiveness.

The GCC is already investing heavily in MENA areas, but further liberalization and investment incentives could bring the region in line with cutting-edge global standards. High hydrocarbon production and prices have lifted export and fiscal revenue in the GCC, enabling its members to press ahead with major infrastructure plans. The GCC's real 2013 GDP growth of 3.7% compares with 1.2% in the rest of the MENA region. The potential and historical growth across the MENA region is about 5%.

Integration into the global economy can be measured by the degree of trade openness, which is defined as the ratio of the sum of exports and imports of goods and services over nominal GDP. According to this measure, there is a strong positive relationship between greater integration and higher growth over the long-term, the report said.

Competitiveness is another key aspect of global integration. The World Economic Forum's (WEF) 2013-14 Global Competitiveness Index shows the GCC countries in the top league.

Structural reforms aimed at improving competitiveness could lead to higher sustainable growth. Greater efforts to attract investment for infrastructure, including those by the GCC countries, likely would yield high growth dividends in the entire region, according to the report.

For related information, see October 7, 2013, article - Saudi Arabia's $30 Billion Cement Consumption Led by Mega Projects.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.