ICAEW: GCC non-energy growth remains resilient despite oil output cuts
The latest Economic Insight report for the Middle East, commissioned by ICAEW and compiled by Oxford Economics, predicts a slow recovery for the region in 2024 due to extended oil production curbs. The GCC growth forecast has been revised down to 2.2% from 2.7% three months ago, though non-energy sectors remain resilient, including in Bahrain and Qatar.
3 min
The OPEC+ group’s extension of voluntary output cuts through Q3 implies a delayed recovery in GCC energy sectors. GCC oil output will now shrink by 2.6% this year instead of the 1.3% expansion forecasted three months ago. Saudi Arabia, which is cutting production to the greatest extent, will see oil activities contract by 5% this year, down from a predicted growth of 0.7% three months ago. However, as voluntary production cuts are reversed in 2025, energy sectors will begin making positive contributions to GCC growth.
Qatar’s GDP growth projection for this year stands at 2.2% and is expected to rise to 2.9% in 2025. In contrast, Bahrain’s GDP growth is 3.1% this year, but is expected to slow to 1.4% in 2025. Since Qatar is not involved in the OPEC+ production quotas, its gas sector is a priority, with authorities doubling down on the North Field gas expansion project, promising a positive medium-term impact. Bahrain, on the other hand, continues to diversify its economy and reduce reliance on oil revenues. Last year its non-oil growth grew by 3.4%, accounting for nearly 84% of GDP.
High-frequency data paints a positive outlook for non-energy sectors across the GCC. In Saudi Arabia, investments are expected to flow into key sectors supporting giga-projects, including construction, manufacturing, and transportation. Strong momentum in the sports and entertainment sector will also be seen as the country’s transformation continues. The hospitality sector will likely follow, with tourism remaining key to Saudi’s growth agenda. Tourism is a strategic sector in other countries too and will remain a key growth driver. Tourism activity has rebounded strongly, with record visitor numbers across the GCC in 2023, extending into this year.
Non-oil economies will continue to grow despite the GCC’s fiscal positions deteriorating. Saudi Arabia, Bahrain, and Kuwait will likely see budget deficits this year and next as the current oil price level is below the fiscal breakeven point. However, the overall GCC budget position will likely remain in surplus, bolstered by strong financial standings and favorable credit ratings, allowing continued access to funding from capital markets and IPOs.
Hanadi Khalife, Head of Middle East, ICAEW, said: “While geopolitical risks present headwinds for the GCC and wider Middle East, we are encouraged by the ongoing commitment to diversification and sustainability targets. Qatar, for example, became the first GCC sovereign to issue green bonds despite not having explicit net-zero targets. Bahrain is also aligning its non-oil economic growth with its Economic Vision 2030 and COP28 commitments to reduce carbon emissions by 30% by 2035.”
Scott Livermore, ICAEW Economic Advisor, and Chief Economist and Managing Director, Oxford Economics Middle East, said: “Although the region faces escalating pressures amid slowing global economies, the GCC remains relatively positive due to strong bilateral deals and investment. Qatar recently signed a 20-year supply contract with India for 7.5 million tonnes of liquefied natural gas annually, and a 27-year contract with Taiwan for 4 million tonnes. “Bahrain has also seen significant investment growth following the launch of the Golden License initiative in April 2023, which requires a minimum investment of US$50mn and the creation of at least 500 jobs. Bahrain’s financial services sector contributed nearly 18% of GDP, surpassing oil, which contributed 16%.”
The GCC inflation forecast for 2024 has been lowered by 0.3 percentage points to 2.2% this year, with a further slowdown to 2.1% expected next year. Excluding housing rents in some countries, notably Saudi Arabia, inflationary pressures remain contained, with rates below 2% in all GCC countries except Kuwait and the UAE.
Given the exchange rate pegs against the US dollar, GCC central banks tend to track the US Federal Reserve’s policy rates. The US Federal Reserve is expected to begin gradually cutting policy rates in September, totalling a 150bps reduction by the end of 2025.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
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Compliance with these deadlines is crucial to avoid administrative penalties.
2 min
The UAE’s Federal Tax Authority (FTA) is urging Corporate Taxpayers to adhere to submission deadlines to avoid fines. Specifically, Resident Juridical Persons with licenses issued in May (regardless of the year) must submit their Corporate Tax registration applications by July 31, 2024, in line with Federal Tax Authority Decision No. 3 of 2024.
This decision aligns with the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and its amendments, effective from March 1, 2024. The FTA stresses the importance of meeting these registration deadlines, which have been communicated through various media channels and direct outreach to registered company owners in the UAE.
Utilizing the EmaraTax Platform
Compliance with these deadlines is crucial to avoid administrative penalties. The deadlines apply to both juridical and natural persons, including Resident and Non-Resident Persons in the UAE. Detailed information on these deadlines and other relevant issuances can be found on the FTA’s official website.
According to the FTA’s Public Clarification, Resident Juridical Persons established or recognized before March 1, 2024, must submit their tax registration applications based on the month their license was issued. Those with expired licenses as of March 1, 2024, should submit their applications based on the original issuance month. For those holding multiple licenses, the earliest issuance date applies.
Administrative penalties for corporate tax violations have been in effect since August 1, 2023. To facilitate the registration process, taxpayers must use the “EmaraTax” digital platform, available 24/7, or seek assistance from accredited tax agents and government service centers.
The FTA has also emphasized the importance of providing accurate information and submitting updated supporting documents correctly with the electronic registration application, noting that registering for Corporate Tax for a juridical person requires uploading various documents, including the commercial license, the Emirates ID card, the passport of the authorized signatory, and proof of authorization for the authorized signatory.
A comprehensive video explaining the registration process through the “EmaraTax” platform is available on the FTA’s website. This platform, designed according to international best practices, aims to streamline the registration journey, submission of periodic returns, and payment of due taxes for all UAE taxpayers.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
