PwC Report: Resilient Middle East Economy Amid Oil Cuts

In a tumultuous economic landscape marked by geopolitical tensions and oil production cuts, PwC’s latest ‘Middle Economy Watch – April 2024’ report has offered illuminating insights into the resilience of the Middle East economy. Despite facing significant hurdles, the region’s non-oil sector stands strong, propelled by substantial investments across various industries. 

The extension of OPEC+ production cuts into Q2 of this year is anticipated to have repercussions on oil GDP in Oman, Bahrain, and Saudi Arabia. However, amidst these challenges, the non-oil sector continues to flourish, showcasing remarkable resilience amidst the volatility of the oil market. 

Disruptions in the Red Sea have sparked renewed discussions on the necessity for alternative trade routes. While the path forward may be fraught with obstacles, initiatives like the India-Middle East-Europe Economic Corridor and Iraq’s Development Road offer promising solutions, albeit contingent upon the resolution of current conflicts. 

A notable highlight in the report is the significant surge in green financing, which doubled to $24 billion in 2023. Spearheaded by the UAE and Saudi Arabia, this momentum underscores a growing emphasis on sustainability and economic diversification, aligning with global initiatives such as COP28. 

Richard Boxshall, Partner and Chief Economist, PwC Middle East commented: “Oil demand plays a key role in influencing the growth of oil-exporting Middle East countries. Nonetheless, strong growth in the non-oil sector is expected to counterbalance these impacts.” 

Stephen Anderson, Partner, Middle East Strategy Leader, PwC Middle East said: “The region is increasingly focusing on sustainability, aligning with net zero ambitions and the imperative for economic diversification. The growth in green finance is a strong indication of this focus and has the potential to enhance the region’s appeal to foreign investors.” 

As the region charts its course through economic uncertainties, indicators such as GDP and PMI point towards significant growth in Saudi Arabia and the UAE. In this evolving landscape, the report suggests a transition towards sustainable practices and explores avenues for economic diversification and job creation. 

As the Middle East embraces green finance and adapts to geopolitical shifts, resilience and innovation emerge as critical drivers shaping its economic trajectory.