Skip to content Skip to footer

Loading Results

Middle East Economy Watch

July 2021

The recovery is building momentum, but weaknesses remain

Start adding items to your reading lists:
or
Save this item to:
This item has been saved to your reading list.

Over a year since the start of the COVID-19 pandemic, the “return to normal” always seems to be just a few months away, but keeps receding. There is good reason to think that, at least from an economic perspective in the GCC, that destination will soon be reached. Seasonally adjusted Saudi non-oil output hit a new high in Q1 and, although the Kingdom has had to cancel foreign Hajj pilgrims for a second year, residents are now visiting shops more frequently than in February 2020 before the full impact of the pandemic hit our region, according to Google mobility data.

There is no downplaying the pain of 2020, in human terms or economically, which amounted to the worst recession and public health crisis in most people’s lifetimes. The economic impact across our region was even worse than the global average because of the region’s dependence on oil and vulnerable sectors such as tourism. This also means that the recovery will be a little slower than elsewhere. However, leading indicators show that that recovery is already building momentum and IMF forecasts expect the Middle East economy as a whole to have returned to its previous level by mid-2022.

Real estate prices in Dubai, one of the benchmarks of regional confidence, are seeing the most sustained increases since before the oil crash in 2014. And with the postponed Expo coming up in October there is likely to be more to come.

Aside from vaccine rollouts and economic recovery, our region faces other challenges on the horizon. The move towards a global minimum corporate tax regime, driven by wealthy countries seeking to prevent multinationals from shifting profits to tax havens, presents challenges.

Although the GCC isn’t commonly used as a tax haven, we have traditionally had low-tax or no-tax environments, but if compelled to change in the future then this might dent our competitiveness.

Contact us

Hani Ashkar

Hani Ashkar

Middle East Senior Partner, PwC Middle East

Tel: +971 4 304 3100

Stephen Anderson

Stephen Anderson

Middle East Strategy and Markets Leader, PwC Middle East

Tel: +971 4 304 3100

Richard Boxshall

Richard Boxshall

Middle East Chief Economist, PwC Middle East

Tel: +971 4 304 3100

Follow us