The International Monetary Fund has stated that Gulf Cooperation Council (GCC) countries are well positioned to strengthen their resilience to global economic shocks, according to its latest report titled “Economic Outlook and Policy Challenges in GCC Countries”, released today and obtained by Al Jazeera Net.
The report noted that GCC economies have maintained strong resilience and have been able to bolster their economic capacity despite a challenging external environment.
It highlighted that non-hydrocarbon activity has remained robust, supported by strong domestic demand, sustained reform momentum, limited regional spillovers, and the relatively modest direct impact of higher U.S. tariffs, given the exemption of energy products and the limited trade links with the United States.
While external balances have narrowed due to oil production cuts and strong imports, the report emphasized that external positions remain generally strong.
The IMF stressed that the economic outlook remains favorable, although risks are tilted to the downside amid heightened global uncertainty.
The report added that economic activity will continue to be supported by several factors, including the easing of oil production constraints, the expansion of natural gas production, strong reform implementation, and the execution of large-scale projects facilitated by ample financial buffers.
It also pointed out that external financial reserves are expected to remain at comfortable levels, despite a decline in current account balances driven by rising imports.
In conclusion, the IMF stated that downside risks dominate in the near term, as oil prices may decline and financial conditions could tighten amid elevated uncertainty. Over the medium term, ongoing global structural transformations pose two-sided risks to GCC economies.
