By Claire Ferris-Lay
Saudi's largest bank says region to play increasingly key role globally.
The GCC is set to become a $2 trillion economy in the next decade and will become increasingly more important to the global economy, according to a new report.
The growth will be driven by oil, demographics and diversification, NCB Capital, the investment banking arm of National Commercial Bank, Saudi Arabia's largest bank, said.
“The GCC region is on track to establish itself as a $2 trillion economy in the course of the coming decade, a near-doubling of the current size,” said the report. “The GCC countries are well positioned to assume a critically important position in the emerging new world order.”
The GCC’s combined share in global GDP has continued to increase, said the report. In 1990, GCC countries contributed 0.85 percent compared to 1.08 percent in 2000 and 1.54 percent in 2008. By 2020, NBC Capital believes the figure could reach 1.8 percent.
Oil will continue to fuel the region’s economic growth with more than 281 projects worth $304bn in the pipeline, said the report. But it warned that Iraq’s increasingly ambitious plans could constitute “the main risk factor” to the region.
Non-oil related initiatives will become increasingly important, led by the petrochemical and energy industries as well as basic infrastructure, said the report.
Oil revenue accounted for 61 percent of the GCC’s GDP in 2001 but this figure declined to 56 percent in 2007.
“Although the diversification process has been to a significant degree derivative – critically reliant on oil-related income and liquidity – many sectors are no beginning to develop critical mass and momentum,” said the report.