Looking ahead: five GCC trends to watch for 2023

Looking ahead: five GCC trends to watch for 2023

2022 was another year of uncertainty, characterised by geopolitical tensions, the invasion of Ukraine, a global energy crisis, high inflation, continued supply chain disruption and financial market volatility. However, against this backdrop the region has generally been more insulated, buoyed by the stronger performance in the oil-exporting GCC countries, as well as playing host to successful international events such as the second half of the postponed Expo 2020 in Dubai, COP-27 in Egypt and most recently the FIFA World Cup in Qatar. As we look ahead into 2023, what key trends and themes will shape the GCC economies?

Click here for more on the key trends to watch in 2023.

1. The GCC will escape the global slowdown

GDP growth could lose momentum going into 2023 with a third of the world’s economies entering a recession, while forecasts for the GCC in 2023 are more upbeat with 3.6% GDP growth expected this year.

2.  The resurgence of the non-oil economy

The PMI’s for the non-oil sector remained well in expansion territory for most of 2022, and this momentum is set to continue at pace as the GCC economies continue to diversify.

3. The liquidity squeeze will ease

The unprecedented speed of increase in the Federal Reserve rate, which has been largely mirrored in the GCC countries, has put significant pressure on market liquidity. This will ease with corrective action in 2023.

4. Continuing efforts to green the economy

All eyes are now on the UAE as the host of COP28 later this year. With most GCC countries making net zero commitments, the increased focus on the region will provide impetus for further reforms.

5. The war for local talent intensifies

Greater emphasis is likely to be given to the localisation of the private sector workforce in tandem with the increase in labour force participation amongst nationals, particularly in Saudi and the UAE.