GCC integration could boost the economy by US$36 billion
GCC (Gulf Cooperation Council) economies are facing a decisive moment. With oil prices falling, they have to accelerate the creation of growth drivers that do not rely on oil revenues.
Our analysis shows that removing obstacles to trade and investment would boost the GCC economy by US$36billion – with 96% of the gain coming from the removal of bureaucratic barriers to efficiency.
We argue in our latest Growth Drivers report that another integration push would help governments to achieve these goals by boosting efficiency and productivity and attracting foreign investment.
Strength in unity
If the GCC were to become one single market instead of six separate ones, it would be the ninth largest economy in the world today – similar in size to Canada and Russia and not far from India. If it is able to keep growing at an annual average of 3.2% for the next 15 years, it could become the sixth largest economy in the world by 2030, hovering just below Japan.
EY analysis shows that a fully functioning single market would reduce overall trade costs in the GCC, boost productivity and encourage higher levels of intra-regional trade.
Value of growth through integration
EY has developed an integration model to measure the economic impact of removing the remaining non-tariff barriers that hold back trade, investment and productivity.
The benefits would be spread across all six economies, with the strongest gains in Bahrain, Oman, Saudi Arabia and the UAE.
The most significant impact comes not from boosting intra-GCC trade, but from making the region’s trade and investment relations with the rest of the world easier.
“The next five years must focus on investing for long term stability and prosperity by generating new sources of income.” Gerard Gallagher, MENA Advisory leader
The next phase of GCC integration needs to address and facilitate change in three key areas: