Oil prices are up, but the GCC must focus on its non-oil economic recovery

Collaboration across the region will be key to building resilience

Non-oil sectors have been growing as governments across the Gulf boost diversification efforts. Reuters

Following a long period of uncertainty, GCC economies have renewed hope, as oil prices have been rising these past few months. According to research published last month by MUFG, a bank, GCC countries are expected to witness a combined GDP growth of 6.1 per cent in 2022.

Aside from an increase in fuel prices, we must also credit non-oil sectors, as well as swift and effective responses to the pandemic for the uptick.

Although the data is promising, we must proceed with caution. There is always room for uncertainty, so the best way forward is by safeguarding our interests and being as self-reliant as possible so we are not impacted to a great degree in the face of a crisis.

Recovery phases can be challenging and I believe collaboration is the key to strengthening our region as a whole, from local businesses to cross-border collaborations that leverage the best of our resources for combined benefit.

As far as manufacturing industries are concerned, there is great potential in the GCC to grow. Our nations can enjoy higher levels of food security, for example, if we work towards becoming less dependent on imports than we are at the moment.

Oman, for instance, boasts a history of fishing and agriculture in the Salalah region, but there is room to grow and meet modern standards of production. Despite the challenges brought forth during the Covid-19 pandemic, the Sultanate’s agriculture sector witnessed growth of 9.8 per cent last year.

I do not doubt that investment, planning and the application of global best practices could surge food production in Oman and the wider Gulf region, reducing our reliance on imports in coming decades.

Another industry that must be a top priority for both investors and governments is tourism. Following an extended period of limited travels, more and more people around the world will be looking to travel and unwind.

GCC countries have fared extremely well in this front on their own, but there is no time like now to join hands and promote the diversity within our region by creating cohesive travel packages that appeal to travellers both within and outside the region.

Regional partnerships between travel operators, attractions, hotels and airlines will not only boost business but also drive innovation within our region’s tourism landscape and contribute towards the long-term expansion of the sector.

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Although the data is promising, we must proceed with caution

Most important, the GCC’s greatest asset and the key to the region’s future, its youth, is in need of a morale boost following the uncertainty of these past few years.

New and recent graduates are in a job market during a time of economic recovery, and are facing challenges that they could not have prepared for during their tenures as students.

Renewed efforts towards job creation, implementation of training and mentorship programmes, reduced lending rates for aspiring entrepreneurs and encouraging dialogue between our youth and more seasoned business leaders can help lead the region towards a more optimistic mind-set.

The pandemic pushed organisations to adapt to an environment that changed without much notice, and this shows us that it is always possible to find innovative solutions to keep businesses running.

We have employed use of technologies to facilitate various levels of communication, and going forward these can serve as ways to engage with members of the workforce who are restricted to working remotely.

A wider talent pool is of high value to employers, and job seekers are no longer limited to work in close proximity thanks to evolving business communication practices.

There is also an opportunity for employers to collaborate with universities across the region and engage directly with students on campus, offering mentorship, training and employment opportunities.

The GCC region has faced a series of economic challenges. However, careful planning, diversification of economic interests over the past decades, the adaptability of our citizens and swift crisis-response by our governments have all helped us through these tough times.

These factors have also set the stage for a promising recovery phase, but we must exercise caution and continue to find new ways to innovate and safeguard our interests as we move forward.

We have come a long way in a few short decades and undoubtedly have the capacity to continue on that path. With the help of strategic planning, investment, synergetic relationships and alliances I am sure we will be able to strengthen the region and pull ourselves through any period of potential uncertainty or challenge.

Published: April 07, 2022, 8:00 AM
Mohammed Alardhi

Mohammed Alardhi

Mohammed Alardhi is executive chairman of Investcorp and chairman of Bank Sohar, and was the longest-serving Omani head of the Royal Air Force of Oman