The flash Q1 GDP figures for Saudi Arabia showed the economy grew at its weakest pace in two years at the start of 2023, reflecting the cut in oil production in line with the OPEC+ decision in October. And the even more recent voluntary output reductions that came into effect this month will strengthen the headwinds to economic growth in the Gulf this year. What’s more, oil prices have slid back since the decision taken last month. The door for further fiscal loosening further is closing and, in turn, this will reduce the support for non-hydrocarbon sectors. All told, we think that GDP growth across the Gulf states will be much weaker than the blockbuster paces seen in 2022 and well below consensus expectations.
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