If the GCC countries were to catch up to the average OECD level of diversification, the region could see additional gains of up to $17.7 billion (€15.9 billion), according to EY’s latest report, ‘Growth Drivers 2 report: Digging beneath the surface – Is it time to rethink diversification in the GCC?’ The report, which uses a tracker to look at the levels of diversification across the GCC and how to speed up progress, was launched at the Economist event, ‘Future of Work: Middle East’.
“Dependence on oil and growing youth unemployment are the GCC’s biggest economic challenges. With recent oil price volatility, diversification has returned to the top of the GCC agenda; it’s an opportunity worth $17.7 billion (€15.9 billion). To put that into context, it is more than three-quarters of the entire flow of foreign direct investment to the GCC region for 2013,” said Gerard Gallagher, MENA Advisory Leader, EY.
The EY Diversification Tracker, which benchmarks the GCC countries both globally and against each other, provides a standardised basis for assessing the degree to which economies have moved away from dependence on oil. It focuses on three aspects — export complexity, the share of the non-oil sector and private versus public sector spending — which have been combined to give a percentage of diversification relative to the highest global performer.
The report identifies a ‘sweet spot’ where regional strengths, economic impact and nationals’ employment preferences meet, allowing all three factors to be achieved.