GCC states rapid economic recovery fuels major investment in the energy transition

GCC states rapid economic recovery fuels major investment in the energy transition

Energy prices are driving a rapid economic recovery in the GCC, with most states forecast to achieve significant fiscal surplus by the end of the year. However unlike in past cycles, we expect to see stronger discipline around spending and surpluses utilised to pay down debt and to invest domestically and internationally. Some of the investment in the region is funding the energy transition, where the region’s abundant sunshine and cheap marginal land is driving a boom in solar power and the development of hydrogen as a key component of a future circular carbon economy. This is according to the latest PwC Middle East Economy Watch - Q2 ‘Oil booms and hydrogen looms’, launched today.

In February, the invasion in Ukraine resulted in various implications across the region. The surge in oil and gas prices - which is the third major oil price boom of the 21st century - had a radical impact on the fiscal outlook for oil-exporting countries (the GCC, Iraq and Libya), forecasting to achieve fiscal surpluses this year. Conversely, oil importers (Egypt, Jordan, Lebanon and Palestine) suffer from the rise in prices which are a major source of strain on their fiscal position.

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