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World Bank Country Director for GCC: Non-Oil Sector to Drive Saudi Growth

World Bank’s Country Director for the Gulf Cooperation Council Safaa El-Kogali
World Bank’s Country Director for the Gulf Cooperation Council Safaa El-Kogali
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World Bank Country Director for GCC: Non-Oil Sector to Drive Saudi Growth

World Bank’s Country Director for the Gulf Cooperation Council Safaa El-Kogali
World Bank’s Country Director for the Gulf Cooperation Council Safaa El-Kogali

The World Bank expects the Gulf Cooperation Council (GCC) region to grow by 2.8% in 2024 and 4.7% in 2025. This growth is driven by OPEC+ gradually increasing oil production from mid-2024 and strong non-oil economic activities.

In Saudi Arabia, the economy is predicted to grow by 2.5% this year, thanks to a booming non-oil private sector. The non-oil sector is set to grow by 4.8% in 2024, while the oil sector is expected to shrink by 0.8%.

These predictions highlight the GCC’s shift towards diversifying its economies beyond oil.

The World Bank has updated its growth forecast for the GCC region. It now expects a lower growth rate of 2.8% for this year, down from the previous estimate of 3.6%.

However, the growth outlook for next year has increased to 4.7%, up from the earlier projection of 3.7%.

Safaa El-Kogali, the World Bank’s Country Director for the GCC, told Asharq Al-Awsat that the region’s economic performance slowed to 0.7% in 2023 due to OPEC+ oil production cuts, despite strong growth in 2022.

On the other hand, non-oil sectors grew by 3.9%, thanks to ongoing reforms and diversification efforts.

El-Kogali is optimistic about the future, predicting GDP growth of 2.8% in 2024 and 4.7% in 2025. This positive outlook is due to the expected gradual increase in oil production and the continued strong performance of non-oil sectors.

Moreover, the World Bank predicted the GCC’s non-oil GDP will grow by 3.6% this year and 3.5% in the medium term, fueled by expansive fiscal policies, low interest rates, and strong private consumption and investment.

Oil GDP is expected to grow by 1.7% in 2024 and jump to 6.9% in 2025 as oil production quotas gradually increase.

Oil and gas revenues will remain critical for the region’s fiscal policies and external balances. The fiscal surplus for GCC countries is expected to narrow to 0.1% of GDP in 2024, with the current account surplus projected to be 7.5% of GDP, down from 8.4% in 2022.

El-Kogali warned of significant uncertainties and risks.

“The outlook is clouded by uncertainty and downside risks,” she said.

“The conflict in the Middle East poses substantial risks, especially if it escalates or involves other regional actors,” added El-Kogali.

“While such tensions could drive up oil prices, bringing unexpected gains for the GCC, they could also destabilize financial and trade markets and weaken economic confidence,” she explained.

El-Kogali also noted risks like slower growth in China, prolonged high interest rates, and severe climate conditions, all of which could negatively impact the region.

Assessing Saudi Arabia’s economic diversification efforts, El-Kogali said: “Saudi Arabia has already taken significant steps towards realizing its economic potential and diversifying away from oil reliance.”

“Structural reforms have been implemented over the past two years, demonstrating the Kingdom’s commitment to reform,” she asserted.

“Economic diversification lies at the heart of Vision 2030, with all efforts aimed at achieving this national goal. We see Saudi Arabia making significant progress in diversifying the real economy and increasing the contribution of non-oil sectors to GDP.”

“Improvements in public finance revenue diversification are evident, with non-oil revenue increasing from 3.5% of GDP in 2011 to 12% in 2023.”

“However, there’s room for further focus and improvement in diversifying Saudi export baskets, as non-oil exports remain modest, accounting for less than 10% of GDP,” noted El-Kogali.

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Business

From Boston to Denver, US Drivers Cut Back as Iran War Pushes Fuel Costs Higher

A nozzle pumps diesel into the fuel tank of bus in Orange, Calif., Tuesday, April 7, 2026. (AP)
A nozzle pumps diesel into the fuel tank of bus in Orange, Calif., Tuesday, April 7, 2026. (AP)
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From Boston to Denver, US Drivers Cut Back as Iran War Pushes Fuel Costs Higher

A nozzle pumps diesel into the fuel tank of bus in Orange, Calif., Tuesday, April 7, 2026. (AP)
A nozzle pumps diesel into the fuel tank of bus in Orange, Calif., Tuesday, April 7, 2026. (AP)

Boston resident Pat Ouedraogo has cut longer-distance trips, while aspiring law student Skyler Burke drives extra miles to avoid pricier gasoline pumps closer to home. In Houston, auto broker David Wright has switched from a gas-guzzling race car to an all-electric vehicle.

These struggles are being echoed by motorists across the United States, many of whom have grown increasingly wary of the Iran war as it drives fuel prices toward record highs.

Energy market experts have described the six-week-old war as the worst oil-supply disruption ever as major production facilities have been hit and a key shipping passage has effectively closed.

"It's a situation where you feel powerless about these prices," Ouedraogo said, while pumping a few gallons of gasoline into his Nissan SUV at a Shell station that was charging $4.99 a gallon.

Average US gasoline prices stood at $4.16 a gallon on Friday, while diesel averaged $5.67, the most that consumers have paid at the pumps ahead of the peak summer travel season since Russia's February 2022 invasion of Ukraine roiled global energy markets, data from GasBuddy showed.

Those prices translate into an estimated $10.4 ‌billion increase in US gasoline ‌and diesel spending this year compared with the same March 1-April 10 period last year, since ‌the ⁠war began, GasBuddy's Patrick ⁠De Haan said.

For Houston-based trucker Eddie Esquivel, the surge in diesel prices has translated into a near-doubling of his weekly expenditures to $1,600-$1,700 from $800-$900 before the war.

"These prices are hitting real hard. Diesel was $2-something a gallon. Now, it could hit $6," Esquivel said at a QuikTrip filling station in South Houston, Texas.

"You got truck payments, you got to buy tires, you got to do oil changes, and you got a family," Esquivel said. "This is killing us."

POLITICAL FALLOUT FROM PUMP PRICES

To be sure, consumers are paying dearly for fuel across the world, as Iran's blockade of the Strait of Hormuz has starved Asian and European markets of Middle Eastern oil supplies.

The United States is the world's largest fuel consumer, so pump prices hold a unique significance in American politics.

The searing economic ⁠pain felt by motorists due to the persistence of Russia's war in Ukraine had been a ‌major influence in their decision to elect Donald Trump as president in November 2024.

Now, just ‌months ahead of midterm US elections in November, Americans' approval of Trump has crashed to new lows as they square his campaign promises of lower energy costs ‌against the sharpest increase in consumer prices in nearly four years in March due to the record surge in fuel prices.

"I definitely won't ‌be voting for (the Republican) party or anyone affiliated with this president right now who is in office at all," Kari DyLong said while filling up her pickup truck at a service station outside of Denver.

To make matters worse, the elevated gasoline prices are expected to linger even after Trump eventually decides to end US military involvement in Iran, according to the US government's own admission.

Delegations from the United States and Iran are set to hold talks in Pakistan on Saturday aimed ‌at reaching a permanent ceasefire deal after a fragile two-week truce announced earlier this week.

However, even if such a deal is struck, oil and fuel prices are unlikely to return to their pre-war levels ⁠in quick order, analysts said earlier this ⁠week. US consumers will continue to pay the highest prices in years to fill up their vehicles or fly over the summer, they said.

"We still expect a lingering geopolitical risk premium to remain in the market," said Wei Ren Gan, analyst at consultancy Rystad.

"Rather than a rapid recovery to pre-war levels, prices are likely to soften gradually and could remain relatively higher than pre-war benchmarks."

About 2 million barrels per day of Middle Eastern refining capacity has been knocked out of service due to damage in the ongoing war, according to Macquarie analysts.

DEMAND DESTRUCTION

Signs of demand destruction due to the high gas prices have begun to show in US government data. Gasoline demand in the country in the week before Easter stood at just 8.6 million barrels a day, down 9% from last year's Easter demand.

Other indicators show the extent of hardships consumers are facing: pawn loan transactions have surged 9% as gas prices surpassed $4 a gallon, said Tim Jugmans, financial chief at pawn loan provider EZCORP.

For Denver resident DyLong, the cratering of demand has come in the form of cutting back on personal excursions over the weekends. She faces a 40-minute commute to get to her job as a sales manager for craft brewer Oskar Blues.

"I'm doing things way more at home and not venturing out because I'm having to spend a bigger portion of my paycheck now towards gas to get me to work," she said.

Business

World Bank Chief: Middle East War to Cut Growth, Deliver Cascading Impact

FILE PHOTO: World Bank President Ajay Banga arrives for a signing ceremony with Thailand to host the 2026 International Monetary Fund and the World Bank annual meetings on the last day of this year's meeting, following last month's deadly earthquake, in Marrakech, Morocco, October 15, 2023. REUTERS/Susana Vera/File Photo
FILE PHOTO: World Bank President Ajay Banga arrives for a signing ceremony with Thailand to host the 2026 International Monetary Fund and the World Bank annual meetings on the last day of this year's meeting, following last month's deadly earthquake, in Marrakech, Morocco, October 15, 2023. REUTERS/Susana Vera/File Photo
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World Bank Chief: Middle East War to Cut Growth, Deliver Cascading Impact

FILE PHOTO: World Bank President Ajay Banga arrives for a signing ceremony with Thailand to host the 2026 International Monetary Fund and the World Bank annual meetings on the last day of this year's meeting, following last month's deadly earthquake, in Marrakech, Morocco, October 15, 2023. REUTERS/Susana Vera/File Photo
FILE PHOTO: World Bank President Ajay Banga arrives for a signing ceremony with Thailand to host the 2026 International Monetary Fund and the World Bank annual meetings on the last day of this year's meeting, following last month's deadly earthquake, in Marrakech, Morocco, October 15, 2023. REUTERS/Susana Vera/File Photo

The war in the Middle East will have a cascading impact on the global economy, even if a ceasefire announced by US President Donald Trump takes hold, World Bank President Ajay Banga told Reuters in an interview on Friday.

And the damage will be far deeper if the ceasefire fails and the conflict escalates, he said.

Banga on Tuesday said global growth could be lowered by 0.3 to 0.4 percentage point in a baseline scenario, with an early end to the war, and by as much as 1 percentage point if it endures. Inflation could increase by 200 to 300 basis points, with a much higher impact - of up to 0.9 percentage point - if the war continues, he said.

The World Bank's baseline estimate now projects growth in emerging markets and developing economies of 3.65% in 2026, compared to 4% in October, dropping as low as 2.6% in an adverse scenario with a longer-lasting war. ‌Inflation in those ‌countries was now forecast to hit 4.9% in 2026, up from the previous estimate of 3%. ‌The extreme ⁠scenario could see ⁠inflation rising as high as 6.7%, according to estimates viewed by Reuters.

The war, which has killed thousands of people across the Middle East, has sent the price of oil up by 50% while disrupting supplies of oil, gas, fertilizer, helium and other goods, as well as tourism and air travel.

The two-week ceasefire announced by Trump appears tenuous, with Israel and Iran continuing strikes. Iran said on Friday that blocked Iranian assets must be released and a ceasefire must take hold in Lebanon before US-Iran talks, scheduled for Saturday in Pakistan, can proceed. Trump said that US warships were being reloaded with ammunition in case the talks failed.

"The question really is, does this current peace and the negotiations that ⁠are going to be happening this weekend - will this lead to a lasting peace and ‌then a reopening of the Strait (of Hormuz)?" said Banga. "If it doesn't lead to ‌that, and if conflict were to break out again, would that have an even larger impact, or longer-term impact on energy infrastructure?"

Banga said the ‌world's largest development bank was already in discussions with some developing countries, including small island states with no natural energy resources, ‌about tapping funds from existing programs under "crisis response windows."

The World Bank's crisis toolkit allows countries to tap previously approved but not yet disbursed funds without additional board approvals, increasing flexibility.

But Banga said the bank was cautioning countries to avoid setting up energy subsidies that they could not afford, which would trigger even bigger problems in the future.

"I worry about making sure that they can come through this crisis, targeting what they need to do, but ‌not doing anything that further deteriorates that fiscal space," he said.

Many developing countries also have high debt levels and interest rates remain high, which constrains their ability to borrow money to ⁠fund measures to respond to ⁠the jump in energy costs and other goods caused by the war. The crisis has put a fresh spotlight on the need for countries to diversify energy supplies and boost self-sufficiency, Banga said. The World Bank last June ended a longstanding ban on funding nuclear energy projects as part of a push to meet rising electricity needs.

Nigeria, which had long faced problems, stood to benefit from a $20 billion investment made by the Dangote Group in refineries, which had actually increased output during the war, and was now supplying aviation fuel to neighboring countries.

"Nigeria should be breathing a sigh of relief. They've built up the ability to have energy security for themselves through that huge investment," he said. "It's actually a really good example of the right thing being done in terms of energy self-sufficiency for them, but also for their neighbors."

The World Bank is also working closely with Mozambique, another African country, to expand its energy production capabilities in both natural gas and hydropower.

The World Bank had many energy products in the pipeline, Banga said, noting that talks were under way with some countries looking to extend the life of their fleets of nuclear reactors, and others keen to move into nuclear power.

"If you don't get nuclear and hydro and geothermal going at scale, along with wind and solar, they will end up doing more with traditional fuels, and nobody really wants that," he said.

Business

Egypt, Russia Hope to Speed up Construction of El Dabaa Nuclear Plant

The Egyptian and Russian delegations meet on Friday. (Egypt’s Ministry of Electricity and Renewable Energy)
The Egyptian and Russian delegations meet on Friday. (Egypt’s Ministry of Electricity and Renewable Energy)
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Egypt, Russia Hope to Speed up Construction of El Dabaa Nuclear Plant

The Egyptian and Russian delegations meet on Friday. (Egypt’s Ministry of Electricity and Renewable Energy)
The Egyptian and Russian delegations meet on Friday. (Egypt’s Ministry of Electricity and Renewable Energy)

Egypt and Russia are pushing to accelerate construction of the El Dabaa nuclear power plant and keep it on schedule.

Egypt’s Minister of Electricity and Renewable Energy Mahmoud Esmat stressed the need for closer coordination between Egyptian and Russian institutions to deliver the project.

Meeting a Russian State Duma delegation on Friday, he said El Dabaa was central to Egypt’s peaceful nuclear program to generate electricity.

The plant is being built in the northern Dabaa area under a 2015 agreement between Cairo and Moscow, with a cost of $25 billion financed through a concessional Russian state loan. Final construction agreements were signed in 2017.

Esmat held talks with a Russian parliamentary delegation led by Nikolai Shulginov, chairman of the State Duma Committee on Energy. Egypt’s Electricity Ministry said discussions focused on expanding cooperation in clean and renewable energy and reviewing progress at the El Dabaa project.

The delegation also visited the project site. Russia’s embassy in Cairo said the trip underscored the project’s strategic importance and reflected strong cooperation between the two countries in the peaceful use of nuclear energy.

Talks covered implementation progress, phase timelines, and preparations for transitioning between construction stages. The two sides also reviewed coordination between joint work teams and companies involved in the project.

El Dabaa will include four nuclear reactors with a combined capacity of 4,800 megawatts, each producing 1,200 megawatts. The first reactor is due to start operations in 2028, with the remaining units scheduled to follow by 2030, according to the Electricity Ministry.

Esmat said Egypt’s partnership with Russia and the two countries’ long-standing ties had supported progress at the site. He said the project was key to diversifying power generation, expanding reliance on clean and renewable energy, and advancing Egypt’s energy mix strategy.

Shulginov said the project goes beyond building a nuclear plant, aiming to establish a new advanced technological industry supported by infrastructure that strengthens Egypt’s energy security.

Egypt’s Electricity Ministry said the plant relies on advanced engineering solutions and cost-effective, reliable technologies that meet the highest safety and environmental standards.