The Gulf countries, known for their hydrocarbon wealth, have the potential to significantly increase their combined Gross Domestic Product (GDP) from a projected $6 trillion to $13 trillion by the year 2050. This remarkable growth could be achieved if these nations adopt a green growth strategy, as indicated by a research report. Currently, the combined GDP of the Gulf Cooperation Council (GCC) countries has reached the $2 trillion mark, and investments in green and sustainable projects have the potential to transform the region into a global economic powerhouse. The findings are presented in the Gulf Investment Report 2023, published by Century International Holdings.
Bal Krishen Rathore, Chairman of Century International Holdings Ltd (CIHL), explained that the Gulf Investment Report 2023 is part of a knowledge series developed to provide comprehensive data for industry stakeholders, helping them plan for future growth and adjust their expansion strategies according to the current economic landscape.
Despite the significant economic potential in the Gulf countries, this potential is not reflected in the global Foreign Direct Investment (FDI) rankings published annually by the United Nations Conference on Trade and Development (UNCTAD). In 2022, total FDI flow into the GCC region decreased by 17.91 percent to $37.12 billion, down from the $45.22 billion recorded in 2021, despite the UAE’s 10 percent increase in FDI, reaching $22.73 billion in 2022. To put this into perspective, these figures are lower than the FDI attracted by countries like Sweden, Hong Kong, and Singapore.
However, it’s worth noting that the total FDI inflow into the GCC countries has more than doubled in six years, surging from $15.52 billion in 2017 to $37.12 billion in 2022, signifying significant growth in the overall investment landscape. By the end of 2022, the GCC region’s inward FDI stock had risen to $529.78 billion. This occurred against the backdrop of a 12 percent decline in global FDI flow, which amounted to $1.3 trillion in 2022, according to the Gulf Investment Report 2023.
Among the GCC countries, the UAE stands out as a key investment destination, attracting $22.73 billion in FDI in 2022, representing 61.24 percent of the total FDI inflow in the GCC that year. The UAE ranks fourth globally in greenfield investment projects, with 997 projects in 2023, according to the World Investment Report 2023.
The World Bank’s economic update highlights that the GDP of the GCC region has already reached $2 trillion. If these countries continue with a business-as-usual approach, their combined GDP is expected to grow to $6 trillion by 2050. However, embracing a green growth strategy could elevate the GCC’s GDP to over $13 trillion by the same year.
Issam Abou Sleiman, Regional Director of the World Bank in the Middle East and North Africa (MENA) region, points out that the transition to a low-carbon economy has been expedited by high oil and gas prices and the need for energy security following global events, including the war in Ukraine. Renewable energy industries are expected to attract trillions of dollars in new investment, and there are opportunities in both upstream and downstream sectors.
The report emphasises that with the right regulations, policies, and investments to support the transition, GCC countries can emerge with stronger, more sustainable economies, creating rewarding job opportunities for their youth while contributing to environmental protection.
Despite the growing potential for investment in the GCC, information on these investments has been published in a fragmented and uncoordinated manner, lacking comprehensive data and analysis.