In a recent meeting with an official in the UAE we discussed future economic development and what the key focus areas for sustainable growth once the oil price bounced.
He said “We need to focus on skills. We are not like Europe and the US we still have a gap and knowledge of building business. We need to build non-oil segments of the economy. We need to focus on the sophistication of skills, thinking and bring these within our ecosystem” Making this the focus for the GCC region will be critical. The transition will of course be challenging but the groundwork has been done.
There is a lot to ask of the nationals of all GCC countries. However the strength of education and the large youth population are a benefit. The first indicators that oil was bouncing back arrived on Tuesday the 7th of June. The West Texas Intermediate, the US oil benchmark, closed above $50 a barrel for the first time since July 21, making it the first time since that month that both WTI and Brent crude have simultaneously closed above that mark.
Simultaneously an official from the Abu Dhabi Executive council announced “ The worst is behind us” …. “ Our budget is still strong. The majority of projects are still there and there are other smaller projects which are moving. The economy is moving”.
On the same day Saudi Arabia took first step toward a revitalised and rejuvenated path to progress and prosperity by unveiling plans to more than triple its non-oil revenue by 2020 while cutting state handouts.
The overall target is ambitious: Riyadh expects non-oil revenue to more than triple by 2020 to SR530 billion ($141.33 billion).
Developing industries like mining and tourism and the creation of some 450,000 private-sector jobs by 2020 are part of the NTP, which will cost around SR270 billion to implement in its initial five-year phase.
The plan also envisages introduction of indirect taxation and the reduction of subsidies on water and electricity, which the government said could provide savings of as much as SR200 billion by 2020.
These are subtle shifts but significant. Saudi Arabia has a clear plan which it is intent on actioning. Abu Dhabi has indicated it is moving and open for business a step that will lift the region. Things in the GCC can move quickly so change can be fast.