São Paulo – Growth estimates for the countries of the Gulf Cooperation Council (GCC) are positive, according to a report on economic perspectives for the region, disclosed on Wednesday (20) by the International Monetary Fund (IMF).
According to the document, the block that includes Saudi Arabia, Bahrain, Qatar, the United Arab Emirates, Kuwait and Oman should grow 3.7% this year and over 4% next year. This is less than the growth of 2012 (5.2%) and 2011 (7.7%), but the figures are still “robust” within the global scenery of economic turmoil and a setting of political and social instability in the region.
The main uncertainty for the future of the block, according to the study, is the price of oil, which, albeit not low, has been higher, and is not expected to rise significantly, as the global market is supplied and the United States signals with the possibility of greater production and even self-sufficiency, which may represent a reduction in the global oil demand for Gulf oil. The commodity is the main source of revenues for the countries of the region.
On the other hand, the Fund report shows that confidence of businessmen in the region is on the rise and that significant infrastructure projects are in progress in the countries of the block. These two factors guarantee stability to growth, mainly in areas not connected to the oil industry.
In that area, however, the main challenge is the creation of jobs in the private sector for native youths, the theme of another study also released by the IMF on Wednesday. But 80% of the workers in private companies in the Gulf are foreign, while natives prefer jobs in the public sector.
The IMF warns that the number of youths entering the labour market by 2018 should vary from 1.2 million to 1.6 million, while the private sector should generate around 600,000 posts and the public sector should have no condition to create the remaining posts. The perspective, therefore, is for a growth in unemployment figures.
To avoid this problem, the IMF warns that the countries of the region should adopt a series of measures, among them lower attractiveness of public employment, providing incentives to job search in the private sector, for work in private organisations, better quality education and the training of professionals, granting greater competitiveness to local workers, as well as liberalisation of domestic mobility for expatriate labour, making the work market more dynamic.
*Translated by Mark Ament
