Question

Assignment Questions:

A. Compare GDP growth of GCC over the past 3 years.

B. Compare FDI exposure of GCC countries for past 3 years.

C. Compare “Diversification of economy policy impact on contribution of NONE OIL sectors in GDP 3 years’ analysis of GCC.

Answer 1

A. GCC (Gulf coperation council )countries is an organisation that includes 6  oil exporting countries in gulf which is called in the name coorperation council of states of Arab . GCC  was formed in year 1981 for  improving buisness science and research of the countries. The member countries of GCC are kingdom of Bahrain, Kuwait, The sulthanate of Oman, The united arab emirates, qatar, the kingdom of saudi Arabia.the rise in of price of oli  on last years reflected in the economic development of GCC and enriched the role in economy and trade patners. the highest yearly growth GDP the since 2013.Thus GDP in current prices incrased  by 7.5% reaching US $ 1,461.9 billion in 2017.

the GDP growth in non oil activity and expanding quickly than oil. The country has an GDP of $657 billion . It had become biggest economy according to the  GDP rate. The surveys shows that GDP of 2018 is  $3.6 5trillion. The Economic growth declined in that period. The Real GDP growth went downwards to 1.9% in 2017 and 2018, as oil prices decreases  , the consumption has depressed . Some infrastructure investments are also likely to be put on hold. In the absence of significant upfront fiscal adjustments, Bahrain will remain vulnerable to fiscal risks. Saudi Arabia’s has etimated growth to be  at -2.3 percent, with non-oil GDP contracting by 4 percent. In the United Arab Emirates, real GDP growth firseen to slip by 3.5 % real compared to 1.3 % recorded in 2019.The GCC is expected to see an improvement in its GDP growth from 2.2 percent in 2018 to 2.6 percent in 2019.Economic growth in the Gulf Cooperation Council (GCC) states weakened in 2019; overall real GDP growth is felt  to 0.8% in 2019 from 2% in 2018 before gradually recoved in 2020-21.

In 2020 due to the pandemic corona virus GDP has declined.  Growth dropped to 0.8 in the second quarter after posting a 2.6% growth rate in the first quarter of 2019 for Bahrain.  The oil and non-oil sectors made a roughly equal contribution to year-on-year growth in the first quarter. Bahrain’s economy aimed to grow at an average rate of 2.3% over 2020-21.unitye Arab emirates have growthin the firs tquater of year. Growth of Qatar had contracted in the year.

B) FDI inflows have largely financed green field investments with 60 percent of the inflows concentrated in three sectors real estate, petroleum, and chemicals . Saudi Arabia and the UAE have attracted almost 80 percent of total FDI inflows.The GCC countries have made strides in improving the foreign trade and investment environment including through regional integration and harmonization. Mean while geopolitical tensions and global weakening of FDI flows to emerging markets are creating headwinds, further reducing non-tariff barriers and regulatory restrictions on FDI would help boost trade and foreign investment. For decades foreign direct investment (FDI) in the region has been limited to 49% stakes, in most countries and sectors, with even greater restrictions in equity markets and real estate. A general challenge analysing FDI in the GCC countries is represented by the lack of consistent, up-to-date and comparable statistical data that allows for in-depth analysis, trend description and cross-sectional comparison.Total foreign ownership of GCC equities stood at about $60bn at end-March 2018, about 6% of market capitalisation. It has been expanding the sectors where 100% ownership is permitted, adding retail and wholesale trade to the list in 2016 and engineering in 2017.FDI in Qatar peaked in 2009 at $8bn, during the country’s gas-industrialisation, but averaged just $1bn/year in 2014-16.

C) Diversification in the GCC Progress So Far. Non-oil output has increased in the GCC economies since 2000, but progress output diversification . high rates of non-oil GDP growth were primarily held by concurrent growth in oil prices .   GCC economies grew slowly in 2019. Non oil sectors across the region expanded ata a robust space. the developmebnt in th non oil sectors will have decisive impact on the trajectory of GCC economies.  GCC in 2018, with a pronounced pick-up expected as economic diversification and fiscal consolidation efforts transition to their next phase and create a broad revenue base across the non-oil economy. business confidence and growth set to benefit from a more in the oil sector and may be in 2018 to mark an important milestone as the GCC’s makes the economy shift towards diversified private-sector growth economies”.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 .