IMF Managing Director Kristalina Georgieva highlighted that GCC–Africa trade has doubled in recent years, surpassing $100bn, yet still accounts for only 7–9% of the GCC’s total trade.
“In this regard, streamlining non-tariff barriers—whether at the national or GCC level—through trade agreements could play an important role,” Georgieva emphasised at a recent meeting with GCC Finance Ministers and Central Bank Governors in Kuwait.
At the gathering, she outlined four key priorities for the region’s sustainable development, which are prudent fiscal policy, economic diversification through a dynamic private sector, deepening domestic financial markets and greater financial integration.
Fiscal policy, she stressed, must carefully balance support for non-hydrocarbon activity and economic diversification with the need for long-term sustainability.
In recent years, several GCC states have recalibrated spending priorities, reducing the risk of overheating. A modest fiscal tightening—appropriate in the context of lower oil prices and moderate debt levels—has been positively received by markets. Notably, Oman’s credit rating was recently upgraded to investment grade by two agencies.
The region has learned from past cycles, with fiscal policy becoming less pro-cyclical.
Going forward, Georgieva advised anchoring spending within a medium-term framework and avoiding abrupt cuts in response to oil price shifts.
To ensure inter-generational equity, however, further fiscal consolidation is needed, amounting to 6–18% of non-hydrocarbon GDP. This could be achieved by mobilising non-hydrocarbon revenues—currently about 10% of GDP below emerging-market peers—while rationalising expenditure, preserving critical public investment, and protecting well-targeted social safety nets.
IMF analysis shows such efforts would also be rewarded by investors: a 1% of GDP fiscal adjustment typically reduces GCC sovereign spreads by around 8 basis points.
True diversification, Georgieva noted, depends on a vibrant private sector. Encouragingly, five GCC countries now rank among the world’s 30 most competitive economies.
Artificial intelligence (AI) represents a major opportunity: the GCC’s AI readiness already exceeds that of many emerging markets thanks to significant investments in R&D, talent, and infrastructure. Partnerships with global tech leaders could further strengthen digital ecosystems, attract FDI, and accelerate knowledge transfer.
Saudi Arabia, for example, could see a 5% boost in labour productivity from AI over the medium term, while the region’s abundant energy resources are enabling large-scale data centre projects in collaboration with companies such as Humain and Nvidia (in Saudi Arabia) Blue Owl Capital (Qatar), and through the US-UAE AI Accelerated Partnership. Robust local financial markets, particularly bond markets, are critical to mobilising long-term capital and insulating diversification strategies from oil price volatility and shifts in foreign investor sentiment.
While opportunities are vast, the volume of outstanding local-currency bonds remains, on average, 1.8% below potential. Strengthening issuance strategies, expanding the institutional investor base, and addressing structural impediments—such as low liquidity and settlement system gaps—would help bridge this gap.
Expanding private sector credit, especially for SMEs, is equally vital. Current credit levels are less than half the advanced-economy average. Improvements in credit information systems, insolvency frameworks, and financial reporting, combined with prudent fiscal and debt management, would significantly enhance credit access.
Finally, Georgieva underscored the importance of deeper regional financial integration. Harmonising regulations and coordinating supervision across the GCC, she argued, would strengthen financial market development and deliver broad benefits for the region’s economies.