GULF ECONOMIC UPDATE The Health and Economic Burden of Non-Communicable Diseases in the GCC Spring 2023 Gulf Economic Update The Health and Economic Burden of Non-Communicable Diseases in the GCC Spring 2023 Middle East and North Africa Region © 2023 International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Cover photos courtesy of: (top) Micola/Shutterstock.com (center, left) The Road Provides/Shutterstock.com (center, right) Digital Saint/Shutterstock.com (bottom) GCC Country Office/World Bank Further permission required for reuse. Publication design and layout by The Word Express, Inc. TABLE OF CONTENTS Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii ‫ملخص تنفيذي‬ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii 1.  Recent Economic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.  Outlook and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 3.  Special Focus: The health and economic burden of Non-Communicable Diseases in the GCC . . . .21 The health costs of NCDs in the GCC region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 The direct and indirect costs of NCDs in the GCC region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 The key risk factors of NCDs in the GCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 The modifiable behavioral risk factors of NCDs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Environmental risk factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Effectively addressing NCDs in the region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Annex 1. GCC Summary Statistics Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Annex 2. Country Summary Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 iii List of Figures Figure 1 The GCC Economies Performed Strongly in 2022… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Figure 2 …with Regional Economic Performance Surpassing Advanced Economies in 2022 . . . . . . .2 Figure 3 Recovery Was Mainly Driven by Consumption, Investments, and Exports… . . . . . . . . . . . . . . .2 Figure 4 …with PMI in Expansion Territory for Most of 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Figure 5 Both Hydrocarbon and Non-Hydrocarbon Sectors Supported the Recovery during 2022… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Figure 6 …Supported by OPEC+ Decisions in Raising Output for Most Part of 2022 . . . . . . . . . . . . . . .3 Figure 7 Signs of a Slowdown are Emerging as a Result of Global Economic Downturn and OPEC+ Decisions… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Figure 8 …Meanwhile, Inflation Has Climbed Steadily in the GCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Figure 9 Higher International Commodity Prices Raised Inflationary Pressures in the GCC… . . . . . . . 4 Figure 10 …but Regional Average Continues to Remain Well-Below Peers . . . . . . . . . . . . . . . . . . . . . . . .4 Figure 11 GCC Central Banks Following Fed’s Tightening Policy in 2022 and 2023 . . . . . . . . . . . . . . . .5 Figure 12 Higher Oil Prices Improved Regional Fiscal Balance… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Figure 13 …and More than Compensated for the Growth in Spending during 2022 . . . . . . . . . . . . . . . . 5 Figure 14 GCC Economies Registering Fiscal Surplus in 2022, Except for Bahrain… . . . . . . . . . . . . . . .6 Figure 15 …Resulting in a Downward Trajectory for Debt Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Figure 16 Higher Oil Exports Widened GCC External Balance Surplus… . . . . . . . . . . . . . . . . . . . . . . . . . .7 Figure 17 …with Less Encouraging Contributions from Non-Oil Merchandise Exports . . . . . . . . . . . . . . 7 Figure 18 Only Bahrain Has Managed to Close the “Competitiveness” Gap . . . . . . . . . . . . . . . . . . . . . . .8 Figure 19 Out of 63 Countries, the GCC Countries Rank in the Top 50% Performers in Overall Competitiveness Index… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Figure 20 …while Female Labor Force Participation Rate in the GCC Exceeding MENA Average . . . . . 9 Figure 21 MENA’s Growth is cut Nearly in Half in 2023 After the Sharp Deceleration in Global Growth Outlook… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Figure 22 …while Oil Prices Moderate to Reflect Uncertainties Surrounding Oil Markets . . . . . . . . . . . 12 Figure 23 OPEC+ Member's Decision to cut Oil Production in April 2023 (mbpd)... . . . . . . . . . . . . . . . 13 Figure 24 ...Resulted in Prices to Recover from their US$70 Pb Low . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 25 Despite the Contraction in Oil Activities, Overall GDP is Projected to Expand in 2023… 14 Figure 26 …Driven Primarily by Private Consumption, Investments, and Looser Fiscal Policy . . . . . . . 14 Figure 27 Following a Strong Performance in 2022, Individual GCC Economies Are Expected to Slow Down in 2023… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Figure 28 GCC Inflation Remain Contained and Relatively Low… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 29 …despite Strong Private Sector Credit Growth in 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 30 The GCC Region Will Continue to Register a Fiscal Surplus in 2023 but Moderate in Medium Term… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Figure 31 …with All Countries, Except Bahrain, Reporting a Fiscal Surplus in 2023 . . . . . . . . . . . . . . . . 16 Figure 32 Overall, Debt-to-GDP Ratio is on a Declining Trajectory across the GCC, except for Bahrain… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Figure 33 …while Robust Foreign Reserve Assets Provide Economic Resilience from Future Shocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Figure 34 Double-Digit Current Account Balance Surpluses Are Anticipated to Continue in GCC Region in the Medium Term… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Figure 35 ...Driven by High Oil Receipts as Well as Merchandise Trade Exports . . . . . . . . . . . . . . . . . . 18 Figure 36 Indirect Costs of NCDs to the Economy through Impacts on Human Capital . . . . . . . . . . . . 23 iv GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC Figure 37 Indirect NCD Costs in the GCC Productivity Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Figure 38 Age-Adjusted Comparative Prevalence of Diabetes, GCC Countries, 2011, 2021, and 2030 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Figure 39 Demographic Shift and High Old Age Dependency Ratio, GCC Countries, 2022, 2030, 2040, and 2050 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Figure 40 Select Determinants and Key Risk Factors of NCDs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Figure 41 Tobacco Use among Adolescents (13–19), GCC Countries, 2019 . . . . . . . . . . . . . . . . . . . . .26 Figure 42 Physical Inactivity-Related Deaths in GCC Countries and Comparators . . . . . . . . . . . . . . . . .26 Figure 43 Prevalence of Obesity Amont Adults (Age-Standarized),GCC Countries and OECD Average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Figure 44 Ambient Particulate Matter Pollution Health Burden in Premature Death Rates and DALY Rates Per 100,000 Population, Age-Standardized, Both Sexes, 1990–2018 . . . . . . . 28 Figure 45 Ambient Particulate Matter Annual Concentration, GCC Region Versus OECD Region, 1990–2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Figure 46 Current Health Expenditure, GCC Countries and OECD Average, 2010 and 2019 . . . . . . . 29 Figure 47 Screenshot of the Three Intervention Arms Used to Test the Country-Specific Effectiveness of Two Different Nutritional Labels in Saudi Arabia . . . . . . . . . . . . . . . . . . . . . .30 Figure 48 Effectively Addressing NCDs: A Life Course Approach and Targeting of the Young . . . . . .31 Figure 49 A Whole of Government Approach to NCD Prevention Involves Many Sectors . . . . . . . . . . .32 List of Tables Table 1 Life Expectancy, Adult Mortality, and Disability-Adjusted Life Years, GCC Countries, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Table 2 Percentage of Total Deaths and DALYS Caused by NCDs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Table 3 Estimated Total Direct Medical Costs Vis-à-Vis GDP, GCC Countries (2019) . . . . . . . . . . . . 23 Table 4 Selected Global Best Buy Interventions to Address the Behavioral Risk Factors of NCDs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 List of Boxes Box 1 Tracking Recent Structural Reforms (Focusing on Q4 2022 and Q1 2023) . . . . . . . . . . . . . 10 Box 2 OPEC+ Announces Production Cuts of 1.66 Million Barrels Per Day (mbpd) . . . . . . . . . . . . 13 Box 3 Obesity Prevalence in the GCC is among the Highest in the World, Representing Substantial Health and Economic Costs for the Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27  v ACRONYMS BMI Body Mass Index NIF National Infrastructure Fund CIT Corporate Income Tax OECD Organization for Economic CPI Consumer Price Index Co-operation and Development DALYs Disability-Adjusted Life Years OPEC Organization of the Petroleum FDI Foreign Direct Investment Exporting Countries FBP Fiscal Balance Program PHA Public Health Authority (Saudi Arabia) GCC Gulf Cooperation Council PIF Public Investment Fund GDP Gross Domestic Product PMI Purchasing Managers’ Index GRE Government-Related Entity RTC Randomized controlled trial IHME The Institute for Health Metrics and VAT Value-Added Tax Evaluation SSBs Sugar-sweetened beverages KIA Kuwait Investment Authority WHO World Health Organization MENA Middle East and North Africa YLDs Years Lived with a Disability MTFP Medium-Term Fiscal Balance Plan YLLs Years of life lost to due to premature NCDs Non-Communicable Diseases mortality NPM Nutrient Profiling Model vii ACKNOWLEDGEMENTS T his report is the product of the Middle East HMNHN), and Zara Shubber (Senior Health Specialist, and North Africa unit in the Macroeconomics, HHNGE). Trade, and Investment (MTI) Global Practice The entire report was developed under the guid- at the World Bank Group. The Macroeconomics ance of Issam Abousleiman (Regional Director, GCC) section of the report was led by Khaled Alhmoud and Eric Le Borgne (Practice Manager, EMNMT). (Senior Economist, EMNMT) and co-authored by Olena The authors are grateful to Ismail Radwan (Lead Ftomova (Macroeconomist Consultant, EMNMT) and Economist and Program Lead, EMNDR) for careful Xinyue Wang (Consultant, EMNMT). revisions of different drafts and to Ashwaq Maseeh The Special Focus section on Non- (Research Analyst, EMNMT) for her valuable inputs and Communicable Diseases was led by Christopher H. contributions. Special thanks to Ekaterina Georgieva Herbst (HD Program Leader, HMNDR) and Ramin Stefanova (Senior Program Assistant, EMNMT) for Ziwary (Health Economist, HMNHN). Co-Authors administrative support. (in alphabetical orders) are Reem Alsukait (Health Translation Services by Global Corporate Specialist, HMNHN), Volkan Cetinkaya (Senior Solutions – Translation and Interpretation (GCSTI). Economist, HMNHN), Mariam M. Hamza (Economist Shahd Alhamdan and Ashraf Al-Saeed HMNHN), Severin Rakic (Senior Health Specialist, managed cover photography, media relations, and HMNHN), Sameh El Saharty (Lead Health Specialist, dissemination. ix From the Regional Director, GCC Countries Middle East and North Africa Region, World Bank Group ISSAM ABOUSLEIMAN FOREWORD T he GCC economies have been a bright spot Downside risks remain and it would be amiss in an otherwise dark economic landscape. not to mention them. Russia’s invasion of Ukraine Average growth in the GCC surpassed continues to dampen Europe’s economy. Although 7 percent in 2022 led by Saudi Arabia, its biggest China is bouncing back after emerging from the tight economy, which was globally the fastest growing Covid-19 lockdowns, troubles in the real estate sector large economy. This growth was not just a result could still disrupt this trajectory. Double-digit inflation of buoyant hydrocarbon prices but also continued in the world’s major economies has not been entirely growth of non-oil economies. The latter was the vanquished and the cycle of interest rate increases is result of persistent structural reforms undertaken by not yet over. several GCC countries to improve the investment On the upside, it is encouraging to see the environment, promote flexible labor markets, and last steps to closing the rift within the GCC as Qatar, encourage women to join the labor market. Bahrain, and UAE announced that they are restoring GCC countries have used the windfall revenues diplomatic ties and opening their respective embassies from oil and gas to rebuild their buffers, pay down shortly. The Saudi-Iran deal brokered by China appears their debt, and shore-up their sovereign wealth funds. to be gaining momentum with an expected permanent They have also sought to protect their vulnerable cease-fire expected to be announced in the conflict populations with continued subsidies on food, fuel, in Yemen. Moreover, the normalization of relations and utilities. Such policies have limited the impact between Saudi Arabia and Turkey, and the return of of inflation on the domestic economy. Finally, GCC Syria to the Arab League have all happened in a short countries have also used their financial muscle to space. Unfortunately, conflict has broken out in Sudan support economically weaker countries in the region. but despite this counterexample it appears promising The stellar growth of 2022 is beginning to that recent events could usher in a new era of peaceful show signs of slowing down and growth is expected cooperation in the GCC and the broader region. to moderate in 2023 and 2024 to 2.5 and 3.2 percent The Special Focus section of the report respectively. Continued prudent macroeconomic focuses on Non-Communicable Diseases (NCDs) management and a focus on increasing non-oil and their burden to the population and governments exports through progress on structural reforms will of the GCC. NCDs such as cardiovascular disease, be important to maintain this track record. cancer, diabetes, and respiratory disease have xi become the leading cause of death and disability in The section argues that increased efforts are the region. NCDs are costly to treat and are already needed to address the underlying behavioral and fueling an increase of health expenditure in the environmental risk factors of NCDs. And this requires region. NCDs moreover negatively impact the regions a whole of government approach that prioritizes human capital by affecting the knowledge, skills, and prevention over treatment, targets the young and health that people accumulate throughout their lives. adolescents, and focuses on the implementation and The years lost from NCDs due to premature mortality monitoring of evidence informed, cost effective, high or early retirement, and the negative impact of NCDs impact interventions. on worker productivity, translates into a considerable cost to the economies of the region. xii GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC EXECUTIVE SUMMARY T he GCC economies performed strongly in mostly pegged to the U.S. dollar have eased the full 2022. Amidst a year of economic uncertainty pass-through of higher import prices to GCC con- marked by inflation, geopolitical crises, and sumers and businesses, resulting in muted inflation supply chain insecurity, the GCC region registered in comparison to other high-income countries. remarkable GDP growth of 7.3 percent in 2022. The Looking ahead, the GCC region is projected boom in commodity prices, increase in oil production to grow at a slower pace. The GCC is expected for most of 2022, and robust non-hydrocarbon to grow by 2.5 percent in 2023, and 3.2 percent in activities supported GDP growth rates beyond those 2024, before moderating to 2.8 percent in 2025. of high-income countries. Oil GDP registered an The weaker performance is driven primarily by lower impressive growth of 12 percent during 2022 despite hydrocarbon GDP, which is expected to contract the announcement by the OPEC+ alliance of cutting by 1.3 percent in 2023 after the OPEC+ April 2023 production quotas by 2 mbpd in November 2022. production cut announcement (by 1.6 mbpd) and the Progress made on structural reforms are global economic slowdown. However, the drop in oil bearing fruits on the economy. Significant reforms sector activities will be compensated for by the non-oil undertaken in the past few years have pushed the sectors, which are anticipated to continue expanding growth of the non-oil sector to 4.8 percent in 2022. by 4.6 percent in 2023 and 3.3 percent during the Improvements to the business climate, competitive- period 2024–2025. The main contributors to this ness, and the jump in female labor force participation growth are private consumption, fixed investments, in the region are all cases in point. However, progress and government expenditures through looser fiscal in the growth of non-oil exports has been limited and policy in response to high oil revenues. further diversification efforts are needed. However, downside risks to the outlook Despite the uptick, inflation remains rela- are numerous. The combination of slowing growth, tively muted in comparison to other high-income persistently high inflation, and tightening financial countries. Inflation in the GCC region rose to an conditions amid high levels of debt increases the average of 3.6 percent in 2022—up from 1.5 percent risks of stagflation, financial strains, continued fiscal in 2021, reflecting strong economic recovery and pressures, and weak investment in many countries. higher global commodity prices. However, rising interest rates, generous subsidies (on fuel, utilities, and food items), and strong local currencies1 that are 1 Kuwait Dinars is pegged to a basket of currencies. xiii Furthermore, activity in China could be weaker than region, through the adverse impact on human capital, expected as a result of worsening disruptions from the knowledge, skills, and health needed to fuel eco- COVID-19 or stress in the real estate sector. While nomic growth. The impact on workforce productivity the recent global banking system woes are weighing is of particular concern, resulting in a substantial on global markets and raising levels of uncertainty. percentage of GDP lost every year. Despite global geopolitical tensions, which rose To mitigate the health and economic markedly after Russia’s invasion of Ukraine, there are burden of NCDs, the region needs to scale up positive regional de-escalation on several fronts: a nor- efforts to target the behavioral and environmental malization of relations within the GCC following the rift risk factors of NCDs. The population of the GCC is between Saudi, UAE, Bahrain, and Qatar; Saudi-Iran aging rapidly and the prevalence of NCDs and the deal brokered by China; the likely Yemeni ceasefire associated economic costs are only expected to expected post-Ramadan; normalization between grow. More needs to be done to address and prevent Saudi Arabia and Turkey; and the return of Syria to the the underlying risk factors of NCDs, especially the Arab League. These developments could have a posi- modifiable behavioral risk factors of smoking, lack tive impact on investor sentiment and overall growth. of physical exercise, and unhealthy diet. More also Special Focus: Non-Communicable Diseases needs to be done to address environmental risk fac- (NCDs) pose a major health burden to the popula- tors such as air pollution levels which are currently far tion and governments of the GCC. Over the past above OECD countries. 50 years, as the GCC countries have controlled com- Effectively addressing NCDs requires a municable diseases and maternal and perinatal health whole-of-government approach, and the effec- complications, NCDs such as cardiovascular disease, tive implementation and monitoring of targeted, cancer, diabetes, and respiratory disease have become evidence-based solutions. Addressing the risk fac- the leading cause of death and disability in the region. tors of NCDs requires an increased strategic focus on NCDs are also a growing concern from an prevention over treatment, targeting of the young and economic perspective. NCDs impose a growing adolescents, and the development and implementa- direct cost to the governments of the GCC, already tion of evidence-informed, cost effective, high impact fueling the rise in health care costs. Direct cost interventions. Governance structures that can effec- comes from the often complex, costly, and/or chronic tively mobilize, incentivize, and hold accountable the nature of care required for NCDs. NCDs also impose many non-health sectors in the implementation and substantial indirect costs to the economies in the monitoring of cost-effective interventions are critical. xiv GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC Key Take Away Charts: Recent Economic Trends in the GCC Economies …supported by the strong performance of hydrocarbon and The GCC continued economic recovery in 2022… non-hydrocarbon sectors 8 10 Contribution to GDP (percent) 8 6 6 Real GDP growth (percent) 4 4 2 2 0 0 –2 –2 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 –4 Saudi United Qatar Kuwait Oman Bahrain Arabia Arab Emirates –6 2019 2020 2021 2022 Oil Non-oil GDP growth After a period of low growth in price levels, inflation climbed steadily in the region… …however, GCC average remains well below peers 6 10 5 8 4 Inflaiton rate (percent) Inflation rate (percent) 3 6 2 1 4 0 2 –1 –2 0 –3 2019 2020 2021 2022 –2 2018 2019 2020 2021 2022 Saudi Arabia UAE Qatar Kuwait Oman Bahrain GCC Advanced economies European Union US Higher oil prices improved regional fiscal balance… …and widened GCC external balance surplus. 50 20 15 40 15 10 Y/Y growth (percent) 30 5 Percent of GDP 10 Percent of GDP 20 0 5 10 –5 0 –10 0 –10 –5 –15 2020 2021 2022 –20 GCC, Current Account Balance (lhs) 2019 2020 2021 2022 GCC, Exports (rhs) Fiscal balance Revenue Expenditure GCC, Imports (rhs) Executive Summary xv ‫ملخص تنفيذي‬ ‫الخليجي منوا ً بنسبة ‪ 2.5‬يف املائة يف عام ‪ 2023‬و ‪ 3.2‬يف املائة يف عام ‪2024‬‬ ‫قبل أن يرتاجع النمو إىل ‪ 2.8‬يف املائة يف عام ‪ .2025‬ويُعزى ضعف األداء يف‬ ‫املقام األول إىل انخفاض إجاميل الناتج املحيل للقطاع الهيدروكربوين الذي‬ ‫ققت اقتصادات دول مجلس التعاون الخليجي أداء قوياً خالل‬ ‫عام ‪ .2022‬يف خضم عام من عدم اليقني االقتصادي اتسم بالتضخم‬ ‫واألزمات الجيوسياسية وانعدام األمن يف سالسل التوريد‪ ،‬سجلت‬ ‫ح‬ ‫من املتوقع أن ينكمش بنسبة ‪ 1.3‬يف املائة يف عام ‪ 2023‬بعد إعالن أوبك‬ ‫منطقة دول مجلس التعاون الخليجي خالل عام ‪ 2022‬منوا ً ملحوظاً يف الناتج‬ ‫‪ +‬يف أبريل‪/‬نيسان ‪ 2023‬عن خفض اإلنتاج (مبقدار ‪ 1.6‬مليون برميل‬ ‫املحيل اإلجاميل بلغ نسبة ‪ 7.3‬يف املائة‪ .‬فقد ساهمت الطفرة يف أسعار السلع‬ ‫يومياً) والتباطؤ االقتصادي العاملي‪ .‬ومع ذلك‪ ،‬سيتم تعويض االنخفاض يف‬ ‫األساسية‪ ،‬والزيادة يف إنتاج النفط خالل معظم عام ‪ ،2022‬وزخم األنشطة‬ ‫أنشطة القطاع النفطي من خالل القطاعات غري النفطية التي من املتوقع‬ ‫غري النفطية يف دعم معدالت منو الناتج املحيل اإلجاميل مبا يتجاوز معدالت‬ ‫أن تستمر يف النمو بنسبة ‪ 4.6‬يف املائة يف عام ‪ 2023‬و ‪ 3.3‬يف املائة عىل‬ ‫البلدان ذات الدخل املرتفع‪ .‬وسجل الناتج املحيل اإلجاميل للقطاع النفطي منوا ً‬ ‫د االستهالك الخاص واالستثامرات الثابتة‬ ‫التوايل عىل املدى املتوسط‪ .‬ويُع ّ‬ ‫ملفتاً بنسبة ‪ 12‬يف املائة خالل عام ‪ 2022‬عىل الرغم من إعالن تحالف أوبك ‪+‬‬ ‫والنفقات الحكومية من خالل سياسة مالية توسعية بسبب االرتفاع يف‬ ‫مليويَن برميل يومياً يف نوفمرب‪/‬ترشين الثاين ‪.2022‬‬ ‫خفض حصص اإلنتاج مبقدار َ‬ ‫عائدات النفط املتوقعة أهم العوامل املساهمة يف تحقيق هذا النمو‪.‬‬ ‫كام بدأت اإلصالحات الهيكلية التي تم تطبيقها بجني مثارها‪.‬‬ ‫ومع ذلك‪ ،‬فإن مخاطر خفض التوقعات عديدة‪ .‬فاقرتان تباطؤ‬ ‫دفعت اإلصالحات الهامة التي جرى تنفيذها يف السنوات القليلة املاضية‬ ‫النمو مع التضخم املرتفع باستمرار وضائقة األوضاع املالية وسط مستويات‬ ‫منو القطاع غري النفطي إىل ‪ 4.8‬يف املائة يف عام ‪ .2022‬ومن األمثلة عىل‬ ‫الديون املرتفعة يزيد من مخاطر الركود التضخمي والقيود املالية املستمرة‬ ‫ذلك‪ :‬التحسينات التي طرأت عىل مناخ األعامل‪ ،‬والقدرة التنافسية‪،‬‬ ‫ة عىل ذلك‪ ،‬قد يكون النشاط‬ ‫وضعف االستثامر يف العديد من البلدان‪ .‬عالو ً‬ ‫والقفزة الواضحة يف مشاركة املرأة يف سوق العمل يف املنطقة‪ .‬ولكن عىل‬ ‫ة لتفاقم االضطرابات الناجمة عن‬ ‫يف الصني أضعف مام هو متوقعاً نتيج ً‬ ‫الرغم من ذلك ‪ ،‬كان التقدم يف منو الصادرات غري النفطية محدودا ً وتتضح‬ ‫جائحة كوفيد‪ -19‬أو الضغوط التي يتعرض لها قطاع العقارات‪ ،‬فيام‬ ‫الحاجة إىل مزيد من جهود التنويع‪.‬‬ ‫تلقي الصعوبات التي عاىن منها النظام املرصيف العاملي مؤخرا ً بثقلها‬ ‫وعىل الرغم من ارتفاع معدل التضخم‪ ،‬إال أنه ال يزال متدنياً‬ ‫عىل األسواق العاملية وتزيد من مستويات عدم اليقني‪ .‬وعىل الرغم‬ ‫ة بالبلدان األخرى ذات الدخل املرتفع‪ .‬فقد ارتفع معدل‬ ‫نسبياً مقارن ً‬ ‫من التوترات الجيوسياسية العاملية التي تصاعدت بشكل ملحوظ بعد‬ ‫التضخم يف منطقة دول مجلس التعاون الخليجي من ‪ 1.5‬يف املائة يف عام‬ ‫الغزو الرويس ألوكرانيا‪ ،‬تشهد املنطقة تطورات إيجابية من التهدئة عىل‬ ‫‪ 2021‬إىل متوسط قدره ‪ 3.6‬يف املائة يف عام ‪ ،2022‬مام يعكس انتعاشاً‬ ‫عدة جبهات‪ :‬من تطبيع العالقات داخل دول مجلس التعاون الخليجي‬ ‫اقتصادياً قوياً وارتفاعاً يف أسعار السلع العاملية‪ .‬ومع ذلك‪ ،‬فقد أدى ارتفاع‬ ‫يف أعقاب القطيعة بني السعودية واإلمارات والبحرين وقطر؛ واالتفاق‬ ‫أسعار الفائدة‪ ،‬والدعم السخي (عىل الوقود واملرافق واملواد الغذائية)‪،‬‬ ‫السعودي‪-‬اإليراين بوساطة من الصني‪ ،‬ووقف إطالق النار املحتمل الذي‬ ‫وقوة العمالت املحلية‪ 2‬التي يرتبط معظمها بالدوالر األمرييك إىل تخفيف‬ ‫يُتوقع أن يدخل حيز التنفيذ يف اليمن بعد شهر رمضان‪ ،‬وتطبيع العالقات‬ ‫انتقال االرتفاع يف أسعار الواردات بشكل كامل إىل املستهلكني والرشكات‬ ‫بني السعودية وتركيا‪ ،‬وعودة سوريا إىل جامعة الدول العربية‪ .‬كل هذه‬ ‫يف دول مجلس التعاون الخليجي‪ ،‬مام ساعد عىل ابقاء مستويات التضخم‬ ‫التطورات قد يكون لها تأثري إيجايب عىل ثقة املستثمرين والنمو العام‪.‬‬ ‫خجولة مقارن ً‬ ‫ة بالبلدان األخرى املرتفعة الدخل‪.‬‬ ‫وبالنظر إىل املستقبل‪ ،‬من املتوقع أن تنمو منطقة دول مجلس‬ ‫‪ 2‬الدينار الكويتي مرتبط بسلة من العمالت األجنبية‪.‬‬ ‫التعاون الخليجي بوترية أبطأ‪ .‬يُتوقع أن تحقق دول مجلس التعاون‬ ‫‪xvii‬‬ ‫السلوكية والبيئية لألمراض غري املعدية‪ ،‬إذا أرادت التخفيف من العبء‬ ‫قسم الرتكيز الخاص يف هذا التقرير‪ :‬متثل األمراض غري املعدية‬ ‫الصحي واالقتصادي لتلك األمراض‪ .‬مع توقع منو نسبة املسنني بشكل‬ ‫عبئاً صحياً ثقيالً عىل حكومات دول مجلس التعاون الخليجي وسكانها‪.‬‬ ‫ة بنسبة السكان األصغر سناً‪ ،‬تشري التقديرات إىل أن نسبة‬ ‫كبري مقارن ً‬ ‫إن األمراض غري املعدية هي أمراض مزمنة تتميز بطول مدة رسيانها‬ ‫انتشار األمراض غري املعدية والتكاليف االقتصادية املرتبطة بها مرشحة‬ ‫وتطورها البطيء بشكل عام‪ .‬وعىل مدى السنوات الخمسني املاضية‪،‬‬ ‫لالرتفاع ال محال‪ .‬لذا تربز الحاجة اآلن إىل تعزيز الجهود ملعالجة عوامل‬ ‫متكنت دول مجلس التعاون الخليجي من السيطرة عىل األمراض‬ ‫الخطر الكامنة لألمراض غري املعدية والوقاية منها‪ ،‬وال سيام عوامل‬ ‫املعدية واملضاعفات الصحية عند األمهات وحديثي الوالدة‪ ،‬اال أن‬ ‫الخطر السلوكية للتدخني القابلة للتعديل‪ ،‬وعدم مامرسة الرياضة البدنية‬ ‫األمراض غري املعدية مثل أمراض القلب واألوعية الدموية والرسطان‬ ‫واعتامد نظام غذايئ غري صحي‪ .‬كذلك‪ ،‬تحتاج الحكومات إىل مضاعفة‬ ‫والسكري وأمراض الجهاز التنفيس أضحت السبب الرئييس للوفيات‬ ‫جهودها للتصدي لعوامل الخطر البيئية الناجمة عن األمراض غري املعدية‬ ‫والعجز يف املنطقة‪.‬‬ ‫مثل تلوث الهواء‪ ،‬وهي متثل مشكلة أكرب بكثري يف دول مجلس التعاون‬ ‫تشكل األمراض غري املعدية أيضاً مصدر قلق من منظور‬ ‫الخليجي منها يف منطقة منظمة التعاون االقتصادي والتنمية‪.‬‬ ‫بد حكومات دول مجلس التعاون الخليجي تكلفة‬ ‫اقتصادي‪ ،‬إذ إنها تك ّ‬ ‫يعتمد نجاح الجهود املبذولة للتصدي لألمراض غري املعدية‬ ‫مبارشة متزايدة‪ ،‬مام قد أدى باألصل إىل ارتفاع تكاليف الرعاية الصحية‪.‬‬ ‫عىل التنفيذ الفعال للحلول الحكومية الشاملة الهادفة والقامئة عىل‬ ‫د هذه التكلفة املبارشة إىل الطبيعة املعقدة واملكلفة و‪/‬أو املزمنة‬ ‫ومر ّ‬ ‫األدلة‪ .‬تتطلب معالجة عوامل الخطر املرتبطة باألمراض غري املعدية‬ ‫يف الغالب للرعاية التي تستلزمها األمراض غري املعدية والتي يجري‬ ‫تركيزا ً اسرتاتيجياً متزايدا ً عىل الوقاية أكرث من العالج‪ ،‬واستهداف الشباب‬ ‫تكبد الجزء األكرب منها يف مستشفيات أكرث كلفة‪ .‬كام تفرض األمراض‬ ‫واملراهقني‪ ،‬وتطوير سياسات مدروسة وفعالة من حيث التكلفة والتأثري‬ ‫غري املعدية تكاليف غري مبارشة كبرية عىل اقتصادات املنطقة‪ ،‬من خالل‬ ‫ة عىل ذلك‪ ،‬ت ُعترب أسس الحوكمة‬ ‫وتستهدف العديد من القطاعات‪ .‬عالو ً‬ ‫تأثريها السلبي عىل الرأس املال البرشي‪ ،‬واملعرفة‪ ،‬واملهارات‪ ،‬وصحة‬ ‫ونات الحكومة عىل اختالفها والتي‬ ‫الفعالة التي تشارك يف إرسائها مك ّ‬ ‫ة لدفع النمو يف املنطقة‪ .‬وتؤدي األمراض غري‬ ‫السكان التي ت ُعترب رضور ً‬ ‫من شأنها تعبئة جهود العديد من القطاعات غري الصحية بشكل فعال‬ ‫املعدية إىل استنزاف إنتاجية اليد العاملة بشكل كبري‪ ،‬وبالتايل إىل خسارة‬ ‫وتحفيزها وإخضاعها للمساءلة يف سياق تنفيذ التدخالت ذات الصلة‬ ‫نسبة كبرية من الناتج املحيل اإلجاميل كل عام‪.‬‬ ‫ورصدها أمرا ً بالغ األهمية‪.‬‬ ‫تحتاج املنطقة إىل تكثيف الجهود الستهداف عوامل الخطر‬ ‫‪xviii‬‬ ‫‪GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC‬‬ ‫رسوم بيانية عن االستنتاجات الرئيسية‪ :‬أحدث االتجاهات االقتصادية يف دول مجلس التعاون الخليجي‬ ‫‪ ...‬مدعوماً با داء القوي للقطاعات النفطية وغ النفطية‬ ‫واصل اقتصاد دول مجلس التعاون الخليجي انتعاشه عام ‪…2022‬‬ ‫‪10‬‬ ‫‪8‬‬ ‫‪8‬‬ ‫‪ %‬من إج‬ ‫‪6‬‬ ‫‪6‬‬ ‫و الناتج ا ح‬ ‫‪4‬‬ ‫‪4‬‬ ‫الناتج ا ح‬ ‫‪2‬‬ ‫‪2‬‬ ‫‪0‬‬ ‫ا ج‬ ‫‪0‬‬ ‫‪–2‬‬ ‫‪–2‬‬ ‫‪2021‬‬ ‫‪2022‬‬ ‫‪2021‬‬ ‫‪2022‬‬ ‫‪2021‬‬ ‫‪2022‬‬ ‫‪2021‬‬ ‫‪2022‬‬ ‫‪2021‬‬ ‫‪2022‬‬ ‫‪2021‬‬ ‫‪2022‬‬ ‫)‪(%‬‬ ‫السعودية‬ ‫ا مارات‬ ‫قطر‬ ‫الكويت‬ ‫ع ن‬ ‫ُ‬ ‫البحرين‬ ‫‪–4‬‬ ‫‪–6‬‬ ‫القطاع النفطي‬ ‫القطاع غ النفطي‬ ‫و الناتج ا ح ا ج‬ ‫‪2019‬‬ ‫‪2020‬‬ ‫‪2021‬‬ ‫‪2022‬‬ ‫‪ ...‬عل ً أن متوسط ا سعار دول مجلس التعاون الخليجي‬ ‫بعد ف ة من مستويات أسعار متدنية‪ ،‬ارتفع التضخم بشكل مطرد ا نطقة ‪...‬‬ ‫يزال أقل بكث من نظ اتها‬ ‫‪10‬‬ ‫‪6‬‬ ‫‪5‬‬ ‫‪8‬‬ ‫‪4‬‬ ‫معدل التضخم‪(%) ،‬‬ ‫معدل التضخم‪(%) ،‬‬ ‫‪6‬‬ ‫‪3‬‬ ‫‪2‬‬ ‫‪4‬‬ ‫‪1‬‬ ‫‪0‬‬ ‫‪2‬‬ ‫‪–1‬‬ ‫‪0‬‬ ‫‪–2‬‬ ‫‪–3‬‬ ‫‪–2‬‬ ‫‪2019‬‬ ‫‪2020‬‬ ‫‪2021‬‬ ‫‪2022‬‬ ‫‪2018‬‬ ‫‪2019‬‬ ‫‪2020‬‬ ‫‪2021‬‬ ‫‪2022‬‬ ‫السعودية‬ ‫ا مارات‬ ‫قطر‬ ‫مجلس التعاون الخليجي‬ ‫ا قتصادات ا تقدمة‬ ‫الكويت‬ ‫ع ن‬‫ُ‬ ‫البحرين‬ ‫ا تحاد ا ورو‬ ‫الو يات ا تحدة‬ ‫وتوسع فائض ا يزان الخارجي لدول مجلس التعاون الخليجي‪...‬‬ ‫أدى ارتفاع أسعار النفط إ تحسن رصيد ا الية العامة للمنطقة‪...‬‬ ‫‪20‬‬ ‫‪15‬‬ ‫‪50‬‬ ‫‪10‬‬ ‫‪40‬‬ ‫‪ %‬من الناتج ا ح‬ ‫‪15‬‬ ‫النمو ع‬ ‫‪ %‬من الناتج ا ح‬ ‫‪5‬‬ ‫‪30‬‬ ‫‪10‬‬ ‫أساس سنوي‪% ،‬‬ ‫‪0‬‬ ‫‪20‬‬ ‫‪5‬‬ ‫‪–5‬‬ ‫‪10‬‬ ‫ا ج‬ ‫ا ج‬ ‫‪0‬‬ ‫‪–10‬‬ ‫‪0‬‬ ‫‪–5‬‬ ‫‪–15‬‬ ‫‪–10‬‬ ‫‪2020‬‬ ‫‪2021‬‬ ‫‪2022‬‬ ‫مجلس التعاون الخليجي‪ ،‬الرصيد الجاري )الجانب ا ي (‬ ‫‪–20‬‬ ‫‪2019‬‬ ‫‪2020‬‬ ‫‪2021‬‬ ‫‪2022‬‬ ‫مجلس التعاون الخليجي‪ ،‬الصادرات )الجانب ا ن(‬ ‫مجلس التعاون الخليجي‪ ،‬الواردات )الجانب ا ن(‬ ‫الرصيد ا ا‬ ‫ا يرادات‬ ‫النفقات‬ ‫املصدر‪ :‬البنك الدويل‬ ‫ملخص تنفيذي‬ ‫‪xix‬‬ 1 RECENT ECONOMIC DEVELOPMENTS 3 The GCC economies performed strongly in 2022 region (Figure 3). For most of 2022 the Purchasers Managers Index (PMI), which measures economic The Gulf region remains a bright spot for the trends in the manufacturing and service sectors as post-pandemic global economy, despite the cost- viewed by purchasing managers has been above of-living crisis and Russia’s invasion of Ukraine. 50, reflecting expansion. In Q4 2022 and Q1 2023, Amidst a year of economic uncertainty marked business sentiment remained positive, although the by inflation, geopolitical crises, and supply chain global economic slowdown, rising interest rates, and insecurity, the GCC region achieved remarkable GDP inflation moderated the PMI (Figure 4). Qatar stands growth of 7.3 percent in 2022 (Figure 1). Although out given the last-minute preparations for the FIFA the economic recovery of the GCC in 2021 was World Cup which took place in November 2022. lagging, the boom in commodity prices, increased oil production for most of 2022, and robust non- The hydrocarbon sector exhibited robust hydrocarbon activities propelled the GDP growth performance during 2022 rates beyond those of high-income countries in 2022 (Figure 2). A review of the hydrocarbon and non-hydrocarbon sectors shows that both sectors supported the The recovery is driven by consumption, recovery in the region (Figure 5). During the first investments, and exports. half of 2022, oil prices reached historical high due to the war in Ukraine. Higher oil price and loosening of Aggregate demand fueled the recovery in 2022. OPEC+ quotas pushed oil production during most of Building on the strong momentum of the oil sector, real GDP expanded by 7.3 percent in 2022 with 3 The data cut-off for the economic estimates and projections private consumption, fixed investments, and net in this report is March 30, 2023. Any data published after exports fueling aggregate demand recovery in the that date will be reported in the next edition. 1 FIGURE 1 • The GCC Economies Performed FIGURE 2 • …with Regional Economic Strongly in 2022… Performance Surpassing Advanced Economies in 2022 8 1.06 6 1.04 Real GDP (2019 = 1) 4 Real GDP growth (percent) 1.02 2 1.00 0 0.98 –2 0.96 –4 0.94 2019 2020 2021 2022e –6 2019 2020 2021 2022 Advanced economies GCC Source: WB Macro-Poverty Outlook, SM 2023. Source: WB Macro-Poverty Outlook, SM 2023; GEP, Jan 2023. FIGURE 3 • Recovery Was Mainly Driven by …with PMI in Expansion Territory for FIGURE 4 •  Consumption, Investments, and Most of 2022 Exports… 80 8 70 6 Below 50 = contraction Contribution to GDP (percent) Above 50 = expansion 4 60 2 50 0 40 –2 30 –4 20 –6 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 2020 2021 2022 GCC, private consumption GCC, govt. consumption GCC, fixed investment GCC, net exports Saudi Arabia Qatar UAE Source: WB Macro-Poverty Outlook, SM 2023. Notes: National authorities, S&P Global Purchasing Managers Survey. 2022. Meanwhile, the OPEC+ alliance announcement authorities eased COVID-related mobility and social to cut production quotas by 2 mbpd starting interaction restrictions. The non-hydrocarbon sectors November 2022 (Figure 6), due to the uncertainty that showed impressive rebound in the construction, retail, surrounded global economic and oil market outlooks, and tourism sectors; boosted by events like the FIFA resulted in weaker GDP growth in Q4 (Figure 7). World Cup, as well as implementing reforms that However, the reduction in hydrocarbon sector activity targeted improvements to the labor market, such as was compensated for by higher oil prices and robust the launch of a mandatory unemployment benefit performance in non-hydrocarbon sectors as GCC program for local and foreign workers in the UAE. 2 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC Both Hydrocarbon and Non- FIGURE 5 •  …Supported by OPEC+ Decisions in FIGURE 6 •  Hydrocarbon Sectors Supported the Raising Output for Most Part of 2022 Recovery during 2022… 19 25 10 18 20 15 8 17 Contribution to GDP (percent) 10 16 5 6 15 0 4 –5 14 2 13 –10 –15 0 12 –20 11 –25 –2 10 –30 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Saudi United Qatar Kuwait Oman Bahrain Arabia Arab Emirates % y/y (rhs) mn bpd (lhs) Oil Non-oil GDP growth Notes: Sum of Saudi Arabia, UAE, Kuwait, Bahrain, and Oman. Source: OPEC and Capital Economics. Source: Haver Analytics and WB Macro-Poverty Outlook, SM 2023. Signs of a Slowdown Are Emerging FIGURE 7 •  …Meanwhile, Inflation Has Climbed FIGURE 8 •  as a Result of Global Economic Steadily in the GCC Downturn and OPEC+ Decisions… 6 12 5 10 4 Real GDP Y/Y growth (percent) Inflaiton rate (percent) 3 8 2 6 1 0 4 –1 –2 2 –3 0 2019 2020 2021 2022 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Saudi Arabia UAE Qatar Bahrain Qatar Saudi Arabia UAE Kuwait Oman Bahrain Notes: Kuwait quarterly data updated only until 2020 Q4, Oman has no real GDP Source: Haver Analytics and WB Macro-Poverty Outlook, SM 2023. quarterly data available. Source: National Authorities. Strong economic recovery and higher global level since 1995. Inflation in the GCC rose to an commodity prices raised inflationary pressures average of 3.6 percent in 2022—up from 1.5 percent in 2021, due to strong economic recovery and Inflationary pressures accelerated during 2022. higher global commodity prices. Stronger aggregate Inflation rose throughout 2022 in almost all economies demand, especially in tourism and construction, (Figure 8). Median global headline inflation exceeded exerted upward pressure on inflation. On the supply 9 percent in the second half of the year, its highest side, shortages of key commodities, exacerbated by Recent Economic Developments3 3 FIGURE 9 • Higher International Commodity FIGURE 10 • …but Regional Average Continues to Prices Raised Inflationary Pressures in Remain Well-Below Peers the GCC… 10 140 600 8 120 500 Inflation rate (percent) 100 US Dollar/mmbtu 400 6 US Dollar/bbl US Dollar/mt 80 300 4 60 200 40 2 20 100 0 0 0 2018 2019 2020 2021 2022M1 2022M2 2022M3 2022M4 2022M5 2022M6 2022M7 2022M8 2022M09 2022M10 2022M11 2022M12 2023M01 2023M02 –2 2018 2019 2020 2021 2022 GCC Advanced economies Crude oil, Brent Natural gas, Europe European Union US Wheat, US HRW (rhs) Source: Haver Analytics, International Monetary Fund and WB Macro-Poverty Outlook, Source: World Bank Commodity Price Data, Mar 2023. SM 2023. the war in Ukraine, contributed substantially to higher internal demand management purposes for the GCC energy and food prices (Figure 9). While there has economies. Higher interest rates have already been been some relief since July 2022, commodity prices accompanied by a steep deceleration in private sector remain well above historic averages. credit growth in Qatar which had been growing at Despite the uptick, inflation remains rela- approximately 14 percent in mid-2021 to average 2.6 tively muted in comparison to other high-income percent in 2022. Much higher interest rates following countries (Figure 10). Rising interest rates and the Fed may well prove to be increasingly counterpro- strong currencies have limited the pass-through of ductive for the GCC countries and their aspiration to higher import prices to GCC consumers and busi- diversify the non-oil economy through private sector nesses.4 Food is also a small component of the CPI in growth. However, the overall high oil prices, loose fiscal the regional basket. Additionally, GCC governments policy, rising economic confidence and a focus on responded to higher commodity prices through domestic development plans have eased the impact product-market interventions that kept domestic of U.S. monetary policy tightening. prices of tradable goods subdued. Subsidies on Recently, the crisis with Silicon Valley Bank fuel and electricity via price controls in most GCC and Credit Suisse elevated risks facing the global countries and rent controls in some countries like the financial system. Presently, a key channel of impact of UAE and Saudi Arabia are additional reasons for the the crisis on the GCC has been through holding direct muted inflation. equity in those two banks. However, this exposure seems Since March 2022, the GCC central banks limited, with most of the exposure stemming from Credit raised interest rates following the U.S. Federal Suisse as large Saudi Arabian and Qatari investors Reserve Board’s (Fed) tightening monetary policy. held substantial stakes in the bank. Another significant With much higher inflation in the United States, the Fed channel of impact from the global banking turmoil is raised interest rates nine times, with the most recent in through oil prices, which witnessed a drop of 13 percent March 2023, which was matched by the GCC central banks (Figure 11). This presents a policy conundrum 4 All GCC country currencies are pegged to the U.S. dollar, for GCC countries since pegged exchange rates except in Kuwait where the dollar remains a key factor in to the dollar imply that they will have to follow U.S. the basket of currencies targeted by the Central Bank of monetary policy. This is probably excessive for current Kuwait. 4 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC GCC Central Banks Following Fed’s Tightening Policy in 2022 and 2023 FIGURE 11 •  0.8 0.7 0.6 Change (percent) 0.5 0.4 0.3 0.2 0.1 0.0 Mar-22 May Jun Jul Sep Nov Dec Feb-23 Mar-23 Mar-22 May Jun Jul Sep Nov Dec Feb-23 Mar-23 Mar-22 May Jun Jul Sep Nov Dec Feb-23 Mar-22 May Jun Jul Aug Sep Dec Jan-23 Mar-22 May Jun Jul Sep Nov Dec Feb-23 Aprl-22 May Jun Aug Sep Nov Dec Feb-23 Mar-23 Mar-22 May Jun Jul Sep Nov Dec Mar-23 US Federal Saudi Arabia United Arab Kuwait Bahrain Oman Qatar Reserve Emirates Source: The Public Broadcasting Service, National Authorities. FIGURE 12 • Higher Oil Prices Improved Regional FIGURE 13 • …and More than Compensated for Fiscal Balance… the Growth in Spending during 2022 50 40 40 30 30 20 Growth (percent) Percent of GDP 20 10 10 0 0 –10 –10 –20 –20 –30 2019 2020 2021 2022 2019 2020 2021 2022 Fiscal balance Revenue Expenditure Revenue Expenditure Source: WB Macro-Poverty Outlook, SM 2023. Source: WB Macro-Poverty Outlook, SM 2023. during the announcement week of the troubled banks. Higher oil prices and ongoing recovery have At low oil prices (around US$70 pb) Oman and Bahrain significantly strengthened fiscal positions of GCC would both be running fiscal and current accounts countries. The regional fiscal balance registered deficits, while larger hydrocarbon GCC producers a surplus in 2022—the first surplus since 2014. The would have tighter fiscal space. As a result, this would collective budget surplus for the GCC region is reduce the scope of fiscal loosening and the ability for expected to reach 4.3 percent of GDP in 2022—from governments to stimulate non-oil sectors. a deficit of 2 percent of GDP in 2021 (Figure 12). The anticipated strong fiscal performance is not only driven Booming hydrocarbon prices have materially by higher oil receipts, spurred by a sharp increase in oil strengthened fiscal balances and public sector and gas prices and higher production levels, but is also debt underpinned by ongoing recovery of non-oil activities Recent Economic Developments3 5 FIGURE 14 • GCC Economies Registering Fiscal …Resulting in a Downward FIGURE 15 •  Surplus in 2022, Except for Bahrain… Trajectory for Debt Ratios 10 150 5 120 Debt stock (percent of GDP) Percent of GDP 0 90 –5 60 –10 30 –15 0 Kuwait Bahrain Oman Saudi United Arab Qatar Kuwait Bahrain Oman Saudi Qatar United Arab Arabia Emirates Arabia Emirates 2021 2022 2020 2021 2022e Source: Haver Analytics and WB Macro-Poverty Outlook, SM 2023. Source: Haver Analytics and WB Macro-Poverty Outlook, SM 2023. and fiscal consolidation efforts (Figure 13). Bahrain mainly by the doubling of the VAT rate. As a result, doubling its VAT rate at the beginning of the year, and considering prudent management of recurrent Oman improving fiscal oversight and management by spending in Bahrain, the overall fiscal deficit is esti- recently moving to a single treasury account, and Saudi mated to significantly decline to 3.3 percent of GDP Arabia strengthening credibility of its fiscal frameworks by end-2022. are just few examples of authorities’ commitment to The improved fiscal positions placed debt improve overall fiscal management. on a downward trajectory. Public sector debt-to- Every GCC country registered a fiscal GDP ratios expanded significantly to cope with the surplus in 2022 except for Bahrain, which is pandemic in 2020. However, these ratios began expected to remain in deficit (Figure 14). In Saudi to decline in 2021, and for all GCC sovereigns, the Arabia, higher oil revenues and fiscal consolidation sustained growth in GDP following the large rebound measures have shifted the fiscal balance from a def- of 2022 is expected to continue reducing debt-to-GDP icit of 2.3 percent of GDP in 2021 to a surplus of 2.6 ratios (Figure 15). Nonetheless, most GCC countries percent of GDP in 2022. In the UAE, fiscal balances began with relatively low levels of debt which remain strengthened from both higher oil revenues and the fully sustainable. With higher oil prices and renewed removal of fiscal measures related to the private fiscal reform momentum, Bahrain and Oman’s fiscal sector support during COVID-19, resulting in surplus and external vulnerabilities are also improving debt of 7.4 percent of GDP. Meanwhile, in Kuwait, oil output and foreign exchange reserve dynamics. rose by around 12 percent (y/y) on looser OPEC+ production quotas, despite the oil production cut in Higher energy receipts widened current account November, resulting in a fiscal surplus of 2.2 percent surpluses in the GCC of GDP. The high premium expected for natural gas in Europe from geopolitical tensions lead to surpluses Booming commodity prices have strengthened for the fiscal balances in Qatar and Oman estimated external account surpluses for the GCC countries. at 8.4 percent and 5.4 percent of GDP, respectively. Historically low oil prices in 2020, below US$40 pb, Preliminary fiscal data released for 2022 indicate led to a deficit in the region’s aggregate current that Bahrain government’s total revenues increased account balance. But the external balance swung by 33 percent supported by higher oil receipts and into a surplus of 8.4 and 16.3 percent of GDP in 2021 the rebound of non-oil revenues, which was driven and 2022, respectively (Figure 16). Economies that 6 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC FIGURE 16 • Higher Oil Exports Widened GCC …with Less Encouraging Contributions FIGURE 17 •  External Balance Surplus… from Non-Oil Merchandise Exports 20 15 35% 10 30% 15 Y/Y growth (percent) 25% 5 Percent of GDP Percent of GDP 10 20% 0 5 15% –5 10% 0 –10 5% –5 –15 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2020 2021 2022 GCC, Current Account Balance (lhs) GCC, Exports (rhs) Saudi Arabia UAE Bahrain GCC, Imports (rhs) Oman Kuwait Qatar Source: WB Macro-Poverty Outlook, SM 2023. Source: National Authorities, WITS, and WBG staff calculations. are most dependent on hydrocarbon exports are the more diversified and sustainable economic growth ones with the expected highest surpluses— Kuwait, trajectory for the GCC countries. Qatar, and Saudi Arabia. Bahrain and Oman both recorded remarkable improvement in their external Despite previous efforts by GCC countries, balances. For Bahrain, despite the rebound in imports, diversification is still below potential and higher hydrocarbon and non-hydrocarbon prices and requires further reforms exports posting a surplus of US$1.6 billion during Q3 2022, and an estimated surplus more than 12 percent There is progress in the non-oil economy, but lim- of GDP for the whole year. Oman’s current account ited success in non-oil exports. All GCC countries deficits shifted from 4.9 percent of GDP in 2021 to a have been trying to diversify their economies. There surplus of 5.7 percent in 2022. has been success in terms of the growth of the non- However, non-oil merchandise exports oil sector especially for the year 2022. But there has continue to lag. With booming commodity prices, been limited progress in the growth of non-oil exports the external balance outlook for the GCC countries in relation to GDP. Most GCC countries have experi- remains very favorable as detailed in the Outlook sec- enced very little growth in non-oil exports in the last tion. Yet the fact remains that most of the improvement two decades. In more recent years, countries such in external balances is derived from the hydrocarbon as Saudi Arabia have dedicated massive financial sector. Only two entities in the region experienced resources to diversify their economies as part of their significant growth in non-oil merchandise exports in National Visions and Strategies. Progress to date in 2021 and 2022: Bahrain and Dubai (one of the seven expanding non-oil exports in relation to imports, how- emirates of the UAE) that have been forced to do so ever, has been limited (Figure 18). Only Bahrain has in large part because they have mostly depleted their managed to close this “competitiveness” gap. hydrocarbon reserves (Figure 17). Diversification into Nevertheless, improvements in the non- non-oil exports is exceptionally hard given the well- oil sectors are clear on the creation of new known “Dutch disease” issue, whereby currencies jobs across multiple sectors and geographies strengthen due to the exceptional competitive advan- in the region. The jobs market is continuing to tage of the oil sector. Furthermore, the current cyclical recover as business confidence and hiring activity strength of the U.S. dollar exacerbates this problem. return to pre-pandemic levels. In Saudi Arabia, the These issues need to be addressed to promote a number of Saudis working in the private sector Recent Economic Developments3 7 FIGURE 18 • Only Bahrain Has Managed to Close the “Competitiveness” Gap GCC 16 14 12 10 USD bn 8 6 4 2 0 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Bahrain Kuwait 1.8 3.5 1.6 3.0 1.4 1.2 2.5 USD bn USD bn 1.0 2.0 0.8 1.5 0.6 1.0 0.4 0.2 0.5 0.0 0.0 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Oman Qatar 4.5 3.0 4.0 2.5 3.5 3.0 2.0 USD bn USD bn 2.5 1.5 2.0 1.5 1.0 1.0 0.5 0.5 0.0 0.0 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22 Aug-22 Saudi Arabia United Arab Emirates 20 30 18 16 25 14 20 12 USD bn USD bn 10 15 8 6 10 4 5 2 0 0 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Non-oil export Import Source: National Authorities. continue to increase. The labor force participation 44.2 percent to 47.3 percent. GCC governments rate among Saudis increased from 49.8 percent in continuously invested in human capital development 2021 to 52.5 percent in 2022 and the employment- and supported women’s employment. These efforts to-population ratio among Saudis increase from met with marked success. Today, female labor force 8 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC Out of 63 Countries, the GCC FIGURE 19 •  FIGURE 20 • …while Female Labor Force Countries Rank in the Top Participation Rate in the GCC 50% Performers in Overall Exceeding MENA Average Competitiveness Index… 55 45 50 40 35 45 30 40 MENA Average 25 35 20 30 15 10 25 5 20 0 Overall Economic Government Business Infrastructure 15 performance efficiency efficiency 10 Bahrain Qatar Saudi Arabia UAE Oman Saudi Arabia Qatar Bahrain Kuwait United Arab Emirates Source: IMD 2022, World Competitiveness Ranking. Source: ILO. participation among nationals in the GCC is consider- progress is still needed regarding job stability for ably higher than the MENA average of 19 percent. migrant workers. According to the latest available data, UAE women Structural reforms have progressed sig- have the highest female labor force participation nificantly. Previous reforms have been reflecting rates in the GCC at 52 percent. They are followed by positively in the advancement of the GCC economies Kuwait (50 percent) and Bahrain (47 percent). In Saudi and moving to a more competitive markets and private Arabia, participation rate for woman skyrocketed sector (Figures 19, 20), which will lead the expansion from 20 percent in 2018 to 35 percent in 2022. With of GCC’s share in global non-oil exports. Accordingly, the continued labor reform, labor mobility for migrant the Gulf Economic Update tracks structural reforms workers has increased following the dissolution of the implemented in recent quarters which will continue to kafala system. As of 2022, migrant workers in most nurture a competitive private sector—this edition high- of the GCC countries can leave the country without lights some reforms that were implemented during Q4 explicit permission from their employer. However, 2022 and Q1 2023 in Box 1. Recent Economic Developments3 9 BOX 1. TRACKING RECENT STRUCTURAL REFORMS (FOCUSING ON Q4 2022 AND Q1 2023) Saudi Arabia continued to improve private sector development, its investment environment, as well as tourism promotion. Saudi Arabia launched a new national strategy for industry, aimed at making the country a manufacturing powerhouse by attracting foreign investments and increasing exports across several industries. The government also launched a supply chain initiative to attract global industrial companies, support the growth of key sectors, and attract foreign investments. In addition, Saudi Arabia’s minister of investment announced a tax exemption for multinational companies relocating their regional headquarters to the kingdom in 2023; this measure is part of Vision 2030’s goals to attract foreign businesses. To promote tourism, the authorities introduced new visa regulations to ease tourism travel to Saudi Arabia, including permitting all GCC residents to apply for tourist visas regardless of profession. In addition, the government signed agreements worth US$2.7 billion to set up four investment funds to develop commercial, tourism, and residential projects. The UAE advanced green growth, private sector development, and its business environment agendas. The Abu Dhabi Department of Economic Development announced an expansion of energy incentive schemes including preferential rates for gas and electricity, designed to enhance productivity and improve energy efficiency among manufacturers. Meanwhile, the Ministry of Finance announced changes to the Excise Tax Law, which minimizes tax avoidance and supports the business sector by facilitating the tax-payment process. Furthermore, the authorities issued a new law on the regulation and development of the industrial sector, increasing the flexibility to adopt more supportive policies and provide incentives for local and foreign investments. Moreover, the UAE’s Ministry of Industry and Advanced Technology reduced business fees for 14 services to create an attractive business environment for local and international investors. Qatar enhanced investment promotion. The Qatar Investment Authority launched an initiative to boost liquidity at the Qatar Stock Exchange and attract more foreign asset managers. In addition, the government announced a change in regulations, allowing up to 100 percent ownership of select firms by non-Qatari investors. Kuwait: Kuwait made no progress on structural reforms during the past two quarters largely due to the impasse between the government and parliament. Oman announced new entry rules and enhanced economic growth: Oman announced new entry rules allowing GCC residents of all commercial professions to enter the country without a visa. In addition, the government launched a 3-year fiscal stability program to support the country’s economic growth and the development of its financial sector. Bahrain introduced new labor reforms and regulations. Bahrain announced a new set of labor reforms that will replace Flexi Permits, increasing protections for expatriate workers and employment processes. In addition, the Telecommunications Regulatory Authority launched a new innovative license, enabling the live testing of new technologies and services through a regulatory environment known as the regulatory sandbox. Source: The Arab Gulf States Institute in Washington. 10 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC 2 OUTLOOK AND RISKS The world economy continues to suffer from a financial stress, deeper weakness in major econo- series of destabilizing shocks mies, or rising geopolitical tensions—could push the global economy into recession and debt distress in The global outlook is again uncertain amid emerging and developing economies. financial sector turmoil, high inflation, ongoing Accordingly, the MENA region is expected effects of the war in Ukraine, and three years of to grow by 3 percent in 2023 and by 3.1 percent the COVID-19 pandemic. Global growth is expected in 2024, much lower than the growth rate of to decelerate sharply, to 1.7 percent in 20235—the 5.8 percent in 2022 (Figure 21). The MENA average third weakest pace of growth in three decades, growth rate masks the stark differences across coun- overshadowed only by the global recessions caused tries. Developing oil exporters are forecast to grow by the pandemic and the global financial crisis. at 2.2 percent in 2023, a deceleration from their 3.9 This is 1.3 percentage points below World Bank’s percent growth in 2022. Developing oil importers June 2022 forecasts,6 reflecting synchronous policy are expected to grow by 3.6 percent in 2023 and 3.7 tightening aimed at containing very high inflation, percent in 2024—although this is largely driven by worsening financial conditions, and continued disrup- Egypt’s relatively high expected growth. Setting Egypt tions from the war in Ukraine. The United States, the aside for a moment, other developing oil importers are euro area, and China are all undergoing a period of expected to grow by 2.8 and 3.1 percent in 2023 and pronounced weakness, and the resulting spillovers 2024 respectively. Changes in real GDP per capita are exacerbating other headwinds faced by emerging are arguably a more accurate measure of changes in and developing economies. The combination of living standards. Following a recovery of 4.4 percent slow growth, tightening financial conditions, and in 2022, growth in real GDP per capita for MENA is heavy indebtedness is likely to weaken investment and trigger corporate defaults. Further negative 5 World Bank, Global Economic Prospects, Jan 2023. shocks—such as higher inflation, even tighter policy, 6 World Bank, Global Economic Prospects, Jun 2022. 11 FIGURE 21 • MENA’s Growth Is Cut Nearly in Half FIGURE 22 • …while Oil Prices Moderate to in 2023 after the Sharp Deceleration Reflect Uncertainties Surrounding in Global Growth Outlook… Oil Markets 6 110 100 5 90 Growth rate (percent) USD per barrel 4 80 70 3 60 50 2 40 1 30 2022 2023 2024 2019 2020 2021 2022 2023 2024 World MENA Average spot crude oil Source: Global Economic Prospects, Jan 2023; Middle East Economic Update, Apr 2023. Source: Commodity Market Outlook, April 2023. expected to decelerate to 1.6 percent and 1.7 percent financial strains, continued fiscal pressures, and weak in 2023 and 2024 respectively. investment in many countries. Furthermore, activity in Energy prices are expected to moderate China could be weaker than expected due to stress in 2023 and 2024 (Figure 22). After averaging in the real estate sector. Geopolitical tensions, which US$99.8pb in 2022, prices are expected to fall to rose markedly after the start of the war in Ukraine, US$84 and US$86pb in 2023 and 2024, respectively, could increase further and encompass a larger set but will remain well above their 2016–21 average of countries. In addition to their humanitarian impli- of US$60pb. This outlook comes after OPEC+ cations, escalating tensions could hasten the trend announced cutting oil production by 1.66 mbpd on toward unproductive re-shoring of supply chains, April 2, 2023 (Box 2). The decision came as a surprise put the financial system under strain, and disrupt to markets—previous remarks by Saudi Arabia had the supply of commodities. Finally, the risks associ- indicated the group would stick with their existing level ated with climate change are growing, as changing of cuts of 2 mbpd. Despite this surprise cut, global weather patterns contribute to increasingly disruptive demand is expected to be weak—with the recent events, such as heat waves and floods. banking sector woes weighing on the market—and is However, several positive regional develop- expected to counteract the effect of the reduction in ments could bring upside risks to the region. The supply announced by OPEC+. As a result, uncertainty Saudi-Iran deal brokered by China, the likely Yemeni around the energy price outlook is elevated in part ceasefire expected post-Ramadan, normalization due to the uncertain rebound in China’s growth, as between Saudi Arabia and Turkey, and the return of well as the energy transition. Upside price risks stem Syria to the Arab League are all positive developments from potential supply disruptions, including those from to regional stability and enhanced economic integra- Russian retaliation to a binding price cap imposed by tion. These developments would also have a positive the G7 coalition, and insufficient investment in fossil impact on investor sentiment and overall growth. fuel extraction. The global outlook continues to be clouded The outlook for GCC region is positive although by uncertainty and subject to various risks. The growth across the region is set to slow sharply combination of slowing growth, persistently high inflation, and tightening financial conditions amid After the strong performance of 2022, the GCC high levels of debt increases the risks of stagflation, region is projected to grow at a slower pace. 12 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC BOX 2. OPEC+ ANNOUNCES PRODUCTION CUTS OF 1.66 MILLION BARRELS PER DAY (MBPD) On April 2, 2023, OPEC+ alliance announced further production cuts of 1.66 mbpd starting from May 2023 and lasting until the end of the year. The surprise cut decision is the first time OPEC has made such a significant announcement outside of a planned event and comes in addition to the production adjustments (cut of 2 mbpd) decided at the 33rd OPEC and non-OPEC Ministerial Meeting in Nov 2022. Several OPEC+ members announced that they would “voluntarily” reduce oil production starting from May: Saudi Arabia by 0.5 mbpd, UAE by 0.144 mbpd, Kuwait by 0.128 mbpd, Oman by 0.04 mbpd (Figure 23), among others. At the time of announcement, the price of Brent crude oil fell to US$70pb but has been regaining grounds since then (Figure 24). This decision will mechanically have a negative effect on output growth in the GCC countries but the recovery in oil prices will likely offset the change in volume output and put fiscal and current account in more favorable positions. In addition, unlike in other MENA countries, this development is not expected to raise inflationary pressure across the GCC region. FIGURE 23 • OPEC+ Member's Decision to FIGURE 24 • ...Resulted in Prices to Recover Cut Oil Production in April 2023 from their US$70 Pb Low (mbpd)... 90 (mbpd) 85 Russia Saudi Arabia US Dollars 0.5 0.5 80 Gabon 0.008 Oman 0.04 75 Algeria, 0.048 Iraq, 0.211 Kazakhstan 0.078 Kuwait, 0.128 United Arab Emirates 70 0.144 1-Mar 8-Mar 15-Mar 22-Mar 29-Mar 5-Apr 12-Apr Source: OPEC. Source: OPEC. Regional GDP is expected to grow by 2.5 percent Although the near-term outlook for the GCC in 2023, 3.2 percent in 2024, before moderating to region remains favorable, divergence in individual 2.8 percent in 2025. The weaker performance is country prospects is expected. Following a strong driven primarily by lower oil GDP, which is expected to performance in 2022, all GCC countries are expected contract by 1.3 percent in 2023 (Figure 25), to reflect to face an economic slowdown in 2023. Economic OPEC+ production cuts and the global economic growth of Saudi Arabia, UAE, and Kuwait (the slowdown. The reduction in oil sector activities will GCC-OPEC members) are projected to grow slower be compensated for by the non-oil sectors, which are than their non-OPEC peers (Figure 27) to reflect the anticipated to continue expanding by 4.6 percent in recent OPEC+ recent announcements and slowing 2023 and 3.3 percent in the medium term. The main global activity. Saudi Arabia’s GDP growth is projected contributors to the non-oil growth during the forecast to decelerate to 2.2 percent as a result of a contraction period are private consumption, fixed investments, in oil GDP by 2 percent (in response to the 0.5 mbpd and government expenditures through looser fiscal cut until the end of the year) while the non-oil sectors policy in response to high oil revenues (Figure 26). are expected to grow by 4.7 percent, supported by Outlook and Risks 13 FIGURE 25 • Despite the Contraction in Oil FIGURE 26 • …Driven Primarily by Private Activities, Overall GDP is Projected Consumption, Investments, and to Expand in 2023… Looser Fiscal Policy 12 7 6 5 Contribution to growth (percent) 8 4 3 4 2 Percent 1 0 0 –1 –2 –4 –3 –4 –5 –8 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 Private consumption Govt. consumption Oil GDP Non-oil GDP RGDP Fixed investment Net exports Source: WB Staff calculations. Source: WB Staff calculations. FIGURE 27 • Following a Strong Performance in 2022, Individual GCC Economies are Expected to Slow Down in 2023 15 10 Growth (percent) 5 0 –5 –10 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 Saudi United Arab Kuwait Qatar Oman Bahrain Arabia Emirates RGDP Oil GDP Non-oil GDP Source: WB Staff calculations. looser fiscal policy, and continued structural reforms financial system. Although oil production in Kuwait is including pushing forward the diversification agenda.7 supported by the newly established Al Zour refinery, Meanwhile, in the UAE, oil GDP is projected to fall by it is still projected to contract by 2.2 percent in 2023 2.5 percent while non-oil sectors are anticipated to considering the recent OPEC+ cuts. The non-oil grow by 4.8 percent, supported by strong domestic demand. Overall GDP is expected to grow by 2.8 7 Public Investment Fund (PIF) is aiming to channel percent strengthened by the implementation of the SAR150 billion (US$40 billion) annually; the Shareek ini- government’s reform agenda and CBUAE’s efforts tiative aims to generate about SAR5 trillion (US$1.3 tril- to promote stability, efficiency, and resilience in the lion) of local investment by 2030. 14 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC FIGURE 28 • GCC Inflation Remain Contained and FIGURE 29 • …Despite Strong Private Sector Relatively Low… Credit Growth in 2023 16 9 12 Percent change 6 8 Percent 4 3 0 2020 2021 2022 2023 2024 World Adv. economies 0 Kuwait Saudi Bahrain Oman Qatar United Arab Emerg. markets Middle East & Central Asia Arabia Emirates GCC Domestic credit Inflation Source: IMF WEO Apr. 2023; WB Macro-Poverty Outlook, SM 2023; and WB staff calculations. Source: WB Macro-Poverty Outlook, SM 2023; and Economist Intelligence Unit, 2023. sectors are anticipated to grow by 4.4 percent driven to follow U.S. Federal Reserve policy. Despite signals primarily by private consumption supporting the of higher policy rates, domestic credit in all GCC overall GDP growth of 1.3 percent. Qatar is expected countries is expected to continue growing but at a to grow by 3.3 percent in 2023 with the hydrocarbon slower pace (Figure 29). Restrictive monetary policy sector expanding by 1.4 percent. Robust growth is in Saudi Arabia and a cap on domestic fuel prices will anticipated during this year in the non-hydrocarbon help to restrain potential upward pressure on prices. sectors, reaching 4.4 percent, driven by both private In the UAE, Qatar, Kuwait generous government and public consumption. Oman and Bahrain will subsidies and falling import prices will help keep experience moderate growth in 2023, with anticipated consumer prices subdued. growth rates of 1.5 and 2.7 percent, respectively, aided by the development of new natural gas fields and The GCC region is projected to register strong accelerated implementation of structural reforms in twin surpluses in 2023 and moderate over the Oman and Fiscal Balance Program (FBP) in Bahrain. medium term Inflation is expected to be contained in 2023 The overall fiscal balance in the region is and remain subdued compared to other regions projected to register a surplus in 2023 and moderate in the medium term. The anticipated Inflation in the GCC region will be contained high oil revenues will more than compensate for in 2023 supported by exchange rate pegs, the looser fiscal policy but will narrow the surplus tight monetary policy, and generous subsidies. projected before the recent OPEC+ announcement Inflationary pressure is estimated to be relatively low (April 2023). The combined fiscal surplus for the compared to the rest of the world (Figure 28) and GCC region is expected to reach 3.2 percent of GDP should not have a significant impact on growth nor on in 2023 before moderating to 2.6 and 1.8 percent financial stability. Regional inflation rate is projected of GDP in 2024 and 2025, respectively, to reflect to reach 2.8 and 2.2 percent during 2023 and softening oil prices (Figure 30). The looser policy will 2024, respectively, supported by a relatively strong allow governments, especially those with ample fiscal U.S. dollar, cheaper global commodity prices, and space like Saudi Arabia, UAE, Qatar, and Kuwait, to tight monetary policy as GCC central banks continue support the non-oil sectors and compensate for the Outlook and Risks 15 FIGURE 30 • The GCC Region Will Continue to Register a Fiscal Surplus in 2023 but Moderate in Medium Term… 40 18 16 30 14 12 10 20 8 Growth (percent) Percent of GDP 6 10 4 2 0 0 –2 –10 –4 –6 –8 –20 –10 –12 –30 –14 2019 2020 2021 2022 2023 2024 2025 Fiscal balance (rhs) General government revenue (lhs) General government expenditure (lhs) Source: WB Macro-Poverty Outlook, SM 2023. FIGURE 31 • …with All Countries, Except Bahrain, Reporting a Fiscal Surplus in 2023 15 10 5 0 Percent of GDP –5 –10 –15 –20 –25 –30 –35 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 Saudi United Arab Kuwait Qatar Oman Bahrain Arabia Emirates Source: WB Macro-Poverty Outlook, SM 2023. lost activity in the oil sector. Furthermore, countries’ which prioritizes several objectives that aim to raise efforts in the implementation of fiscal reforms will the standard of living, improve infrastructure and continue to support long term fiscal sustainability and quality of government services, and attain digital macroeconomic stability. For example, in the UAE, transformation, among others. introduction of a Corporate Income Tax (CIT) will All GCC economies are projected to report reduce the country’s dependence on oil and volatility a fiscal surplus in 2023, except for Bahrain which of domestic revenues. The commitment of Oman’s remains in deficit (Figure 31). In Saudi Arabia, the government to implement strong fiscal and structural fiscal balance is expected to register a surplus of reforms under its Medium-Term Fiscal Balance Plan 1.7 percent of GDP in 2023, despite the continued (MTFP), including expenditure rationalization and expansionary fiscal policy and some reduction in oil revenue reforms, have substantially helped improve receipts. Most of the capital spending will continue its fiscal balance. In Bahrain, the government renewed to be channeled through the Public Investment Fund fiscal reform momentum under the revised FBP, (PIF) and other state agencies providing further and endorsed a new four-year program 2023–26, support to non-oil sector development. Hydrocarbon 16 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC activity continues to be the main source of government of sufficient fiscal adjustment, a growing fiscal deficit revenue in the UAE. However, the fiscal position will will keep the debt and financing needs elevated. be also strengthened by government efforts towards Meanwhile, implementation of fiscal revenue reforms diversifying public revenues with the introduction of in UAE will help increase fiscal buffers and overall VAT, implementation of CIT, and the gradual phasing fiscal sustainability. While debt sustainability improved out of the business fee structure. Lower projected in Oman due to high oil prices and fiscal adjustment, oil prices during 2023 will reduce the fiscal surplus8 its debt remains vulnerable to internal and external in Kuwait to 1.3 percent of GDP. Oman’s overall shocks. budget balance is estimated to remain in surplus As a result of declining debt-to-GDP ratio, averaging nearly 2.3 percent of GDP in the medium the region will be less dependent on global term assuming continued implementation of fiscal capital markets access and there will be lower adjustment measures under the MTFP. Qatar’s fiscal risks of rising borrowing costs as global liquidity surplus of 6.5 and 5.3 percent of GDP in 2023 and continues to tighten (Figure 32). In addition, balance 2024 respectively, will be supported by the introduc- sheets among GCC countries continue to strengthen. tion of the VAT in 2023, which will offset some of the Robust reserve assets in the region will provide declines in hydrocarbon revenues and support the resilience against potential future external shocks budget balance in general. (Figure 33). For instance, sizable foreign assets held The strong fiscal position will reduce overall through Kuwait’s sovereign wealth fund (KIA), one of borrowing needs in the GCC region. Fiscal balances the largest globally, continues to underpin the coun- are projected to remain in surplus, but moderate in the try’s economic resilience. However, softer projected medium term, placing collective GCC debt as a share oil prices will narrow fiscal balance surpluses across of GDP on a downward trajectory. Fiscal surplus in the region and raise deficit concerns in the medium Saudi Arabia implies reduced government financing term. Accordingly, pushing forward economic needs, therefore the debt-to-GDP ratio is expected to diversification programs in the GCC, introduction hover around 24 percent of GDP. In Bahrain, the debt- of revenue reforms, and maintaining prudent and to-GDP ratio is projected to increase in the medium well-coordinated fiscal anchors and rules would help term. It is expected that persistent implementation of countries to diversify their revenues and enhance comprehensive fiscal and structural reforms under fiscal sustainability. Furthermore, contingent liabilities the FBP will reduce debt vulnerabilities in the country and rebuild its fiscal buffers. However, in the absence 8 Excluding investment income and FGF transfers. FIGURE 32 • Overall, Debt-to-GDP Ratio Is on a Declining Trajectory across the GCC, Except for Bahrain… 140 120 100 Percent of GDP 80 60 40 20 0 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 Bahrain Oman Qatar United Arab Saudi Kuwait Emirates Arabia Source: WB Macro-Poverty Outlook, SM 2023. Outlook and Risks 17 FIGURE 33 • …while Robust Foreign Reserve Assets Provide Economic Resilience from Future Shocks 800 600 Billions of USD 400 200 0 2019 2020 2021 2022 2023 2024 2025 Saudi Arabia UAE Kuwait Qatar Oman Bahrain Source: IMF WEO April 2023. and risks remain a challenge across GCC economies resilience against future external shocks (Figure 34). and should be closely monitored. It is estimated that the regional current account balance will reach 12.1 percent of GDP in 2023 supported High oil receipts will maintain external balance by improvements in service and merchandise trade surplus sectors across the region. The current account surplus is also expected to remain in double digits during the High oil exports will keep current account forecast period in Saudi Arabia, UAE, Kuwait, and surpluses in double-digits for the majority of the Qatar (Figure 35). Furthermore, the favorable external GCC countries. Maintaining a comfortable external balance outlook will be supported by improvements account position across the GCC economies will in main export markets, such as China’s anticipated continue to boost foreign reserves and strengthen growth prospects following the abrupt abandonment FIGURE 34 • Double-Digit Current Account FIGURE 35 • ...Driven by High Oil Receipts as Balance Surpluses Are Anticipated Well as Merchandise Trade Exports to Continue in GCC Region in the Medium Term… 40 30 15 21 20 Percent of GDP 10 16 10 0 Growth (percent) 5 Percent of GDP 11 –10 0 –20 6 –5 –30 1 –40 –10 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 –15 –4 2019 2020 2021 2022 2023 2024 2025 Saudi UAE Kuwait Qatar Oman Bahrain Arabia Current account balance (rhs) Exports (lhs) Merchandise trade Prim. & second. income Imports (lhs) Services trade Current account balance Source: WB Macro-Poverty Outlook, SM 2023. Source: WB Macro-Poverty Outlook, SM 2023. 18 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC of its zero-covid policy. In addition, bilateral free trade significant tightening of credit conditions. A deeper agreements between UAE and its trading partners will more widespread recession will cover many econo- open major markets, increasing non-oil exports and mies and will feed into energy markets with lower cushioning global headwinds. prices. As a result, lower hydrocarbon revenues would dissipate plans to loosen fiscal policy to support non- The risks to the outlook are skewed to the hydrocarbon sectors, providing less of a buffer from downside notwithstanding elevated oil prices the blow being delivered to GDP growth this year from and regional geopolitical de-escalation oil production cuts. A weaker-than-expected recovery in China An escalation of the war in Ukraine—now in its would have significant cross-border effects, espe- second year—could trigger a rise in supply costs cially for commodity exporters (e.g., Saudi Arabia and for the global economy. The war has markedly the GCC) and tourism-dependent economies. Risks eroded near-term global economic prospects and also include the ongoing weakness in the Chinese raised the possibility of a global recession. The degree real estate market, which could pose a larger-than- of escalation and duration of the military operations expected drag on growth and potentially lead to will determine economic implications on commodity financial stability risks. and financial markets, trade, and overall confidence, Fiscal risks in the region stem from large indirectly dampening non-oil recovery in the GCC public sector and state-owned enterprises. Oil region. On the upside, the region could benefit from price volatility and uncertainty in the oil market will the windfall generated from higher energy prices. continue, which is especially detrimental for the fiscal A severe tightening in global financial con- sustainability of the region. GCC budgets remain ditions will dampen recovery in the GCC. Central dominated by rigid and high spending on wages and banks in the Gulf will import tighter monetary policy transfers which hampers the capacity of fiscal reform. from the U.S. by virtue of their dollar pegs, which will Contingent liabilities in the form of state-owned enter- act as headwinds on domestic demand and recov- prises, such as those in the UAE, pose significant risks eries in the non-oil sectors. Despite relatively lower to the outlook. The GCC needs to move to a more inflation expectations in the region, central banks will targeted social safety net that could support neces- need to hike interest rates by more than they would sary reforms on the fiscal side. Furthermore, a boom have chosen to sustain their exchange rate anchor. in mortgage and real estate activities in some of GCC Furthermore, tighter monetary conditions will raise countries imposes a risk if debt service becomes dif- debt servicing costs for existing loans, increasing vul- ficult due to tighter credit conditions. nerability of households, businesses, and the banking On the upside, despite the global geopo- sector. This is also the case with debt servicing costs litical tensions, which rose markedly after the for the public sector. Some governments in the Gulf start of the war in Ukraine, there are several had been issuing debt aggressively to finance large positive regional de-escalation developments. budget deficits witnessed since 2014. The resumption of Saudi-Iranian diplomatic rela- A sharper and more persistent global tions is a potential game changer for the region that banking system turbulence. More financial institu- could unlock economic potential. Furthermore, the tions that run into trouble, either because of similar likely Yemeni ceasefire expected post-Ramadan, problems faced by Silicon Valley and Credit Suisse normalization between Saudi Arabia and Turkey, banks or due to other unknown vulnerabilities in and the return of Syria to the Arab League will the financial sector, would spark a deeper financial have positive impacts on investor sentiment and crisis causing a loss in confidence in the system and overall growth. Outlook and Risks 19 SPECIAL FOCUS: THE HEALTH AND 3 ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC T his special focus section outlines the current on average almost 23,309 disability-adjusted life years burden of noncommunicable diseases (DALYs) are lost for every 100,000 people as a result (NCDs) and their health and economic costs of ill health, disability, or early death (IHME 2019).9 This in the Gulf Cooperation Council (GCC) countries. compares to much lower rates in the OECD region, Minimizing this burden now and in the future, will of 1.78 deaths per 1,000 adults and 19,123 DALYs require a whole-of-government approach and the (Table 1). In addition to the emotional burden faced implementation of evidence-based solutions that by the people in the GCC region, these years could effectively target the behavioral and environmental have been spent contributing to the overall productivity, risk factors of NCDs in the region. income, and growth of the GCC economies. The main drivers of mortality and morbidity in the GCC are noncommunicable diseases The health costs of NCDs in the GCC (NCDs). NCDs are chronic diseases characterized by region their long duration and their generally slow progres- sion. Over the past 50 years, as the GCC countries Over the last few decades, average life expectancy have controlled communicable diseases and at birth has increased substantially in the GCC region; however, premature mortality and morbidity remain too high. Currently, life expectancy in the 9 The DALY is a measure of overall disease burden, GCC is close to reaching 80 years, which represents expressed as the number of years lost due to ill-health, an increase of more than 13 years in just over five disability. or early death. One DALY represents the loss of the equivalent of one year of full health. DALYs for a decades. Growing incomes and increased access to disease or health condition are the sum of the years of education and health care have all contributed to longer life lost to due to premature mortality (YLLs) and the years life spans. Nevertheless, adults between the ages of 15 lived with a disability (YLDs) due to prevalent cases of the and 60 die at a rate of 2.5 for every 1,000 people, and disease or health condition in a population. 21 TABLE 1 • Life Expectancy, Adult Mortality, and Disability-Adjusted Life Years, GCC Countries, 2019 Life expectancy at birth, Adult (15–60) mortality rate (deaths Adult (15–60) DALYs lost (per Country total (years) per 1,000 population) 100,000 population) Bahrain 80.0 1.40 17,258 Kuwait 79.7 1.07 16,364 Oman 78.0 1.49 17,447 Qatar 81.0 1.04 15,366 Saudi Arabia 77.3 2.95 25,740 United Arab Emirates 79.7 2.82 24,091 GCC average 79.3 2.53 23,310 OECD average 81.0 1.78 19,123 Sources: IHME 2019; World Bank 2019; WPP 2019. TABLE 2 • Percentage of Total Deaths and DALYS Caused by NCDs Total deaths (%) Total DALYs (%) Country 1990 2019 1990 2019 Bahrain 77.3 86.90 70.5 83.9 Kuwait 52.7 79.80 56.2 80 Oman 56.8 68.80 52.5 67.9 Qatar 66.0 67.00 67.1 73.6 Saudi Arabia 52.4 66.20 48.2 67.3 United Arab Emirates 61.8 73.40 64.5 76.5 GCC average 61.2 73.70 59.8 74.9 OECD average 84.9 88.8 77.3 85.4 Source: IHME 2019. maternal and perinatal health complications, NCDs that a staggering 6,400 years of full health are lost per have become the leading cause of death, accounting 100,000 population because of NCDs alone. for 74 percent of all deaths in the region (Table 2). Of these deaths, 80.4 percent are attributed to just four main NCD categories: cardiovascular diseases, The direct and indirect costs of NCDs cancer, diabetes, and respiratory diseases. In 2019, in the GCC region approximately 43,000 people in the six GCC coun- tries succumbed to these four primary NCDs, with NCDs impose a growing direct cost to the gov- cardiovascular diseases responsible for 75 percent ernments of the GCC countries, fueling a rise in of those deaths (Elmusharaf et al. 2022). Aside from health care costs. Direct costs come from the of- mortality, NCDs are a major cause of morbidity and ten complex, costly, and/or chronic nature of care re- disability in the region. NCDs account for 75 percent quired for NCDs, much of which happens at the more of the disability burden in the GCC, and result in a loss costly hospital level. A recent study published in the of 6,400 DALYs per 100,000 population. This means Journal of Medical Economics, estimated the direct 22 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC medical costs of seven major NCDs in the GCC at TABLE 3 • Estimated Total Direct Medical Costs around $16.7 billion (2019 international dollars; a bil- Vis-à-Vis GDP, GCC Countries (2019) lion is 1,000 million), which is equivalent to 0.6 per- Total direct medical cent of gross domestic product (GDP) (Finkelstein et costs (2019 Total direct medical al. 2021).10 The total direct cost (based on per case Country international $, millions) costs (% GDP) cost and prevalence), as a proportion of GDP, var- Bahrain 794 1.0 ies by country and was estimated to be highest in Kuwait 1,806 0.8 Bahrain at 1.0 percent, and lowest in Oman and Qatar Oman 104 0.4 at 0.4 percent (Table 3). These direct costs of NCDs Qatar 1,172 0.4 are expected to grow as the population in the region ages, squeezing scarce health care budgets further Saudi Arabia 8,472 0.5 in all countries. United Arab 4,371 0.6 In addition to the direct costs of NCDs, Emirates economies are affected by their negative impact GCC average 16,719 0.6 on human capital, resulting in substantial indirect Source: Calculations based on Finkelstein et al. 2021. costs. Human capital is critical to the growth of all economies including the GCC ones, and consists of the knowledge, skills, and health that people immediate loss of productivity. The loss of productivity accumulate throughout their lives, enabling them generally takes two forms: presenteeism, which is the to realize their potential as productive members of lost output due to diminished productivity while at society. NCDs impact human capital both indirectly work, and absenteeism, the lost output due to missed and directly and in both the short term and the long days of work. The loss of productivity exhibits some term (Figure 36). The indirect impact of NCDs on of the most substantial and short-term indirect cost of human capital is seen in the intergenerational loss NCDs to the economy. in education investment and outcomes that results from the need to divert resources to tackle NCDs, as well as the loss that comes from unpaid work caring 10 The seven major NCDs in the study included coronary for the chronically ill. The direct impact comes from heart disease, stroke, type 2 diabetes mellitus, breast early death and retirement, from the negative impact cancer, colon cancer, chronic obstructive pulmonary of NCDs on academic achievement, and the more disease, and asthma. FIGURE 36 • Indirect Costs of NCDs to the Economy through Impacts on Human Capital NCDs Direct impact Indirect impact Early retirement Productivity loss Academic achievement and Intergenerational loss in Lower investment in educational attainment education investment by human capital and labor diverting resources market participation by toward disease treatment doing unpaid work caring for the chronically ill Absenteeism Presenteeism Source: Alqunaibet et al. 2021. Special Focus: The health and economic burden of Non-Communicable Diseases in the GCC 23 FIGURE 37 • Indirect NCD Costs in the GCC FIGURE 38 • Age-Adjusted Comparative Productivity Loss Prevalence of Diabetes, GCC (Presenteeism & Absenteeism) as Countries, 2011, 2021, and 2030 a Percentage of GDP (2019) 30 8.7 25 Productivity loss 20 (% of GDP) Percent 3.2 3.4 2.4 2.4 2.7 2.7 15 24.9 18.7 19.5 16.4 17.4 10 13.8 11.3 9.0 Qatar Saudi Arabia Kuwait GCC United Arab Emirates Bahrain Oman 5 OECD average Bahrain Oman United Arab Emirates GCC average Saudi Arabia Qatar Kuwait Presenteeism 2.0 2.0 2.2 2.2 2.5 2.9 6.9 2021 2011 2030 Absenteeism 0.4 0.4 0.5 0.5 0.7 0.6 1.8 Data Source: Original calculations based on data from IDF 2021. Source: calculations based on Finkelstein et al. 2021. Note: Diabetes prevalence estimated for the adult popuation age 20–79. Finkelstein et al 2021, quantified some of has been estimated at around 48 percent ($47.2 the indirect costs of NCDs to the GCC economies billion in 2019 international dollars) of the total costs that occur from the loss of worker productivity. incurred by NCDs in the GCC (Finkelstein et al. 2021). Complications resulting from cardiovascular dis- Cardiovascular diseases (stroke and coronary heart eases, cancer, diabetes, and respiratory diseases can disease), on the other hand, make up 18 percent of all lead to lost days of work or reduced productivity; the total costs, chronic respiratory diseases (chronic and ultimately lead to a decrease in national income. obstructive pulmonary disease, and asthma) 32.5 per- In the GCC, productivity losses are driven primarily cent, and cancers (breast cancer and colon cancer) just by losses from presenteeism followed to a lesser over 1 percent of the total costs. The direct costs asso- extent by losses from absenteeism. Together these ciated with diabetes are fueled by the costly expenses productivity losses were estimated to be more than from hospitalizations and medications needed to treat $80 billion in 2019, equivalent to 2.7 percent of its complications. The indirect costs are a result of GDP in the region (Finkelstein et al. 2021). This cost presenteeism and absenteeism due to the physical varies considerably by country, ranging from a high and emotional challenges of working while experi- 8.7 percent of GDP in Oman to a lower 2.4 percent encing symptoms of high or low blood glucose levels. of GDP in Qatar (Figure 37). The actual indirect cost With a steadily aging population, the direct of NCDs to the GCC economies, moreover, is not and indirect costs associated with NCDs are captured in these numbers, and is thus expected to expected to grow, further increasing pressure on be much larger. These numbers reflect only the cost the GCC economies. With higher life expectancies of productivity losses from seven major NCDs11—they and declining fertility, the proportion of older adults in do not reflect the many other indirect pathways that the population is growing rapidly. An aging population NCDs impact human capital as outlined in Figure 37. means an increased prevalence of NCDs and greater The most significant driver of the direct and indirect cost of NCDs to the GCC economies is by 11 The seven major noncommunicable diseases in the far type 2 diabetes. The prevalence of diabetes in study included coronary heart disease, stroke, type-2 the GCC is among the highest in the world (Figure 38). diabetes, breast cancer, colon cancer, chronic obstructive The direct and indirect cost of type 2 diabetes alone pulmonary disease, and asthma. 24 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC Demographic Shift and High Old Age FIGURE 39 •  2022 to 29.3 percent by 2050 (Figure 39).12 With a higher Dependency Ratio, GCC Countries, old age dependency ratio, there are fewer individuals 2022, 2030, 2040, and 2050 (relative to the elderly) to participate in the workforce and support the associated costs of the elderly. 60 Old-age dependency ratio (%) The key risk factors of NCDs in 40 the GCC Mitigating the health and economic burden of 20 NCDs in the region requires addressing the behavioral and biological risk factors (Figure 40) that have increased with economic growth and 0 Kuwait Saudi Oman Qatar United Bahrain GCC lifestyle changes. While underlying socioeconomic Arabia Arab average Emirates determinants of education, income, and fertility levels 2022 2030 2040 2050 are important, and while environmental risk factors are of increasing concern (discussed below), the central Source: Original calculation based on data from the UN Population Division (medium variant), 2022. determinants to NCDs are modifiable behavioral risk Note: By 2050, the demographic shift in the GCC countries will lead to a high old age factors—in particular, an unhealthy diet, tobacco use, dependency ratio (65+/15-64), with fewer people in the worforce able to support growing number of old population with NCDs and a lack of physical activity. Alcohol consumption, another behavioral risk factor, is generally low in the needs for long-term care and health spending. A recent GCC. Several of these behavioral risk factors also study on Saudi Arabia (Boettiger et al. forthcoming) esti- directly impact many of the biological (or metabolic) mated that between 2020 and 2030 the prevalence of risk factors of raised blood pressure, high sugar levels, diabetes in the country will increase by 1.5 million cases high cholesterol, and obesity. In the GCC region, close annually and the prevalence of stroke will double by 2030 to 40 percent of the population are hypertensive (OECD as a result of aging. The study estimates that the direct costs of managing NCDs in Saudi Arabia will increase by 63 percent by 2030. The increase in costs for diabetes 12 Each number represents the total number of dependents (people aged over 65) per hundred people in the alone will be $2.4 billion. This is concerning because workforce (number of people aged 16–64), expressed the aging population will also result in a higher old-age as a percentage. Data are from the UN World Population dependency ratio, which—according to the UN World Prospects, available at https://population.un.org/wpp/Do​ Population Prospects data—will grow from 3.9 percent in wnload/Standard/MostUsed/. FIGURE 40 • Select Determinants and Key Risk Factors of NCDs Socioeconomic Determinants Behavioral Risk Factors Biological Risk Factors Main NCDs • Education level •Unhealthy diet •Raised blood pressure •Cardiovascular diseases • Income level •Tobacco use • Population growth •Alcohol use •Cancers •Physical inactivity •Raised blood glucose Environmental Risk Factors Non-Modifiable Behavioral •Chronic respiratory Risk Factors •Raised blood lipids diseases • Air pollution •Age •Hereditary •Overweight/obesity •Diabetes Source: authors, adapted from WHO 2019. Special Focus: The health and economic burden of Non-Communicable Diseases in the GCC 25 2018; WHO 2019) and over 33 percent are obese (WHO The economic repercussion of smoking are already big 2016), compared with 26 percent and 20 percent in the when estimating GDP per worker lost due to premature OECD countries, respectively. With healthier behaviors, mortality. In the GCC, the total economic cost of many of these biological risk factors—and many of the smoking and secondhand smoke exposure in 2016 was NCDs themselves—could be averted. estimated to be $14.3 billion, or 1.04 percent of the GCC countries’ combined GDP (Koronaiou et al. 2020).13 Low levels of physical activity are also costly, The modifiable behavioral risk with the region becoming more sedentary—this is factors of NCDs particularly the case among children and youth. Low levels of physical activity are estimated to contribute to 17 Tobacco use, one of the modifiable behavioral risk percent of diabetes cases, 9 percent of cardiovascular factors, while lower in the GCC than it is in many disease cases, and 2 percent of cancer cases (IHME OECD countries, is both costly and increasing 2019), and to be a notable contributor to mortality in the among the young and among female youth. In region (Figure 42). An estimated 80 percent of the pop- 2019, tobacco was responsible for 16.3 percent of ulation in the GCC region are insufficiently active (WHO cancer cases, 22 percent of cardiovascular diseases, 2022b).14 Only 39.0–42.1 percent of men and 26.3–28.4 and 35 percent of chronic respiratory disease cases in GCC countries (Al-Zalabani 2020). Although the 13 The study monetizes the DALYs from smoking by overall smoking prevalence of around 13 percent in the multiplying this number by GDP per worker as earnings, GCC is lower than in the OECD region, tobacco use a common approach in the literature, using 2016 Global among young people and female youth has been on Burden of Disease data from IHME, available at https://gh​ the rise in the GCC (WHO 2019). Tobacco use among dx.healthdata.org/gbd-2016. 14 Internationally recommended levels of physical activity (as adolescents is already a substantial 10.3 percent defined by the World Health Organization, or WHO) includes of the total population, with the aggregate masking 150 minutes of moderate-intensity or 75 minutes of vigorous- variations by country that range from a low of 6.0 intensity physical activity per week. Activity levels below percent in Oman to 18.7 percent in Kuwait (Figure 41). these are considered to be insufficient physical activity. FIGURE 41 • Tobacco Use among Adolescents FIGURE 42 • Physical Inactivity-Related Deaths in (13–19), GCC Countries, 2019 GCC Countries and Comparators 26.5 5.5 24.2 5.0 21.2 4.5 17.8 4.0 15.7 Percent 14.0 3.5 Percent 3.0 8.5 2.5 9.8 10.2 8.7 9.1 7.7 2.0 6.8 20 16.7 18.7 3.9 14.9 1.5 12.1 12.7 10.3 Bahrain Kuwait Saudi Arabia GCC average Oman United Arab Emirates Qatar OECD average 6.0 Oman Qatar United Arab Emirates GCC average Saudi Arabia Kuwait Bahrain OECD average 2000 2010 2019 Both sexes Boys Girls Source: Original caulcations based on data from IHME 2019. Note: Physical inactivity – related deaths in GCC countries are more than double those Source: Original calculations based on data from WHO 2020, and OECD 2019. in OECD countries, and thier number is on the rise. 26 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC OBESITY PREVALENCE IN THE GCC IS AMONG THE HIGHEST IN THE WORLD, REPRESENTING BOX 3.  SUBSTANTIAL HEALTH AND ECONOMIC COSTS FOR THE REGION The Gulf Cooperation Council (GCC) has one of the highest Prevalence of Obesity Amont FIGURE 43 •  levels of obesity in the world. Obesity—defined as a body mass Adults (Age-Standarized),GCC index (BMI) of over 30—is one of the key risk factors for many Countries and OECD Average noncommunicable diseases (NCDs) and thus is associated with a higher risk of morbidity, disability, and death. Its level of impact, as a risk for mortality, is similar to that of smoking (Whitlock et al. 45.6 37.9 42.3 43.1 43.7 35.1 36.1 41.0 2009). More than 30 percent of the population in the GCC are 35.4 31.7 36.8 clinically classified as having obesity, with variations by country 29.8 33.7 ranging from 27 percent in Oman to 37.9 percent in Kuwait 27.0 (Figure 43). This percentage is extremely high when compared 33.3 32.5 32.2 23.2 with a global obesity rate of 13.1 percent (WHO 2022b) and an Percent 30.8 23.1 OECD average of around 23 percent (WHO 2022b). Obesity in the 27.5 25.5 region is increasingly affecting children and youth. Between one- 22.9 23.1 third and one-half of GCC children and adolescents are affected by overweight or obesity, twice or more than the global crude estimated average of 18 percent (WHO 2022b). Obesity alone can incur a massive economic cost. Among GCC Kuwait Saudi Arabia Qatar GCC average United Arab Emirates Bahrain Oman OECD average countries, the economic costs—both direct and indirect—of obesity were estimated to range between 1.5 percent of GDP in Qatar and 2.8 percent of GDP in the United Arab Emirates in 2019 alone Both sexes Male Female (World Obesity, no date-b). In Saudi Arabia, a separate study estimated the direct cost of obesity/overweight to be $3.8 billion, Source: WHO 2016. equal to 0.45 percent of 2021 GDP for the country. And overweight and obesity-attributable absenteeism and presenteeism, which results in lower productivity, was estimated to cost the country a total of $15.5 billion in 2021 alone, equal to 1.86 percent of 2021 GDP (Malkin et al. 2022).These estimates are probably conservative, with other studies quantifying the total economic costs—both direct and indirect—from obesity in Saudi Arabia in 2019 to be $19 billion annually, or 2.24 percent of GDP with projections to increase to $150 billion annually, or 5.7 percent of GDP, by 2060 (World Obesity, no date-a). percent of women in the GCC are estimated to meet unhealthy diet is estimated to account for 37.5 percent the internationally recommended physical activity levels of cardiovascular disease deaths, 20.4 percent of (Mabry et al. 2016). Sedentariness is not necessarily diabetes, and 4 percent of cancer (IHME 2019). confined to adults; it starts at an early age. In Saudi Together with increased levels of sedentariness, Arabia, preschool children experience a 23.4 percent unhealthy diet is fueling high levels of obesity in the decline in physical activity between the ages of 4 and 6 GCC at substantial cost to the health and economies (Al-Hazzaa 2018). This insufficient level of activity also of the region (Box 3). The changes in dietary habits has economic implications. A forthcoming study on occurring along the nutrition transition15 in GCC Saudi Arabia calculates that the direct cost (based on countries has led to a high intake of highly processed health losses and DALYs) of insufficient physical activity foods, sugars, sodium, and unhealthy fats and a low that results in cardiovascular diseases, diabetes, breast consumption of fruits and vegetables. In Saudi Arabia, cancer, and colorectal cancer will average $6.5 billion to approximately 65–70 percent of food and beverages $8.8 billion annually over the next 17 years (2023–40). sold are either processed or ultra-processed, which This translates into 0.92 percent to 1.3 percent of the contributes to around 17–20 percent of caloric intake current GDP (Alqahtani et al. forthcoming). Of all the behavioral risk factors, unhealthy 15 Nutrition transition is the shift in dietary consumption diet is perhaps one of the most detrimental behav- and energy expenditure that coincides with economic, ioral risk factors of NCDs in the region. In the GCC, demographic, and epidemiological changes. Special Focus: The health and economic burden of Non-Communicable Diseases in the GCC 27 (Alluhidan et al. 2022). Sugar consumption per capita still increasing in several countries and is having was estimated to be around 36.4 kilograms per year in considerable impact on the mortality and morbidity of 2022, well above the global average of 22 kilograms their populations (Figure 44). This health impact largely per year (OECD/FAO 2021). And in the United Arab reflects the much higher levels of ambient air pollution Emirates, 19.9 percent of adult respondents reported in the GCC vis-à-vis that region’s OECD counterparts always or often eating processed foods high in salt (Figure 45). Air pollution load assessments conducted (Qawas et al. 2019). with the environment agencies in Kuwait, Bahrain, and Qatar identified critical challenges causing air pollution that included natural dust as a key pollutant, followed Environmental risk factors by refineries, power plants, desalination units, and transport (roads and shipping) (Naber, Al-Duaij, and Outside of the behavioral risk factors, environmental Guttikunda 2016). risk factors—in particular, air pollution—also require particular attention in the GCC. Environmental hazards—the external physical, chemical, biological, and Effectively addressing NCDs in work-related factors that affect a person’s health—are the region contributing drivers of deaths and disability in the GCC stemming from several NCDs, including cancers and The fiscal pressures and increased demand for respiratory diseases (IHME 2019). In the GCC, 20.7 to care that comes with an aging population and 22.9 percent of death rates and 11.5 to 14.1 percent increased prevalence of NCDs requires early of DALY rates can be attributed to environmental planning and further health sector reform. Current risk factors (Rojas et al. 2023 forthcoming). While health expenditure in the GCC, while still below OECD this represents an overall decrease since 1990, the averages, has already grown substantially since 2000 environmental risk factor with the highest burden (Figure 46). To meet the growing fiscal and population among these countries—ambient air pollution—is demands for care, more can be done to advance health FIGURE 44 • Ambient Particulate Matter Pollution FIGURE 45 • Ambient Particulate Matter Annual Health Burden in Premature Death Concentration, GCC Region Versus Rates and DALY Rates Per 100,000 OECD Region, 1990–2019 Population, Age-Standardized, Both Sexes, 1990–2018 70 58.2 160 4,000 60 Premature deaths 51.0 GCC average Premature deaths per 100,000 population 140 3,500 PM2.5 annual concentration 50 DALYs per 100,000 population 120 GCC average 3,000 40 100 DALYs 2,500 80 2,000 30 60 1,500 19.4 20 13.9 40 OECD average 1,000 OECD average 10 DALYs 20 500 Premature deaths 0 0 0 1990 1995 2000 2005 2010 2015 2019 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: Source: Original calculation based on IHME 2019 (from Rojas et al. 2023, forthcoming). Note: PM2.5 = fine particulate matter that consists of particles that are 2.5 microns or Source: Original calculation based on IHME 2019 (from Rojas et al. 2023, forthcoming). less in diameter. 28 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC FIGURE 46 • Current Health Expenditure, GCC have already taken substantial steps to implement Countries and OECD Average, 2010 such solutions, including taxing tobacco products and 2019 and sugary drinks (all GCC countries except Kuwait) (Delipalla et al. 2022); banning tobacco advertising, promotion, and sponsorship (Qatar and Bahrain); 8.8 and reducing the amount of salt through reformula- tion (all GCC countries) (Al-Jawaldeh et al. 2021). Percentage GDP (%) 8.7 However, more measures are needed, including more 5.5 5.7 school health programs that emphasize nutrition, 4.0 4.1 4.3 4.4 physical activity, and education; regulating the use of 2.9 3.8 3.9 electronic cigarettes; imposing a mandatory front-of- 3.6 2.8 3.1 2.7 package label; and further reducing the advertising 1.9 of unhealthy products to children and adolescents. The success of such best buy interven- Qatar Bahrain Oman United Arab Emirates GCC average Kuwait Saudi Arabia OECD average tions depends largely on the extent to which 2010 2019 their design is modified and adapted to take into account local country contexts. What works in one Source: Original calculations based on World Bank, World Development Indicators Database. country might not be equally effective in another, so operational research that tests or explores the effectiveness of global best buy interventions in local sector organizational reform and address remaining contexts can help design interventions for maximum allocative and technical health sector inefficiencies impact. In the GCC region, several countries are in the GCC. Many of the GCC countries have already already doing this. Saudi Arabia, for example, was embarked on impressive and wide-ranging reforms of interested in adopting a front-of-package nutrition their health systems, including a move toward more label—a global best buy that has the potential to outcome-orientated health financing systems, more nudge consumers toward purchasing healthier foods. people-centered integrated service delivery systems, Which specific label to adopt, however, was not clear; and toward systems that incentivize primary care and there was evidence from elsewhere that both a traffic prevention (including stepping up of screening for light label and black warning label could be effective. NCDs) over expensive hospital care and treatment. But in all countries, more can be done to generate greater value for money in the health sector by addressing TABLE 4 • Selected Global Best Buy Interventions remaining inefficiencies and to better target resources to Address the Behavioral Risk Factors of NCDs toward evidence-informed interventions that work. While the health sector plays an important Risk factor Intervention role in addressing NCDs, the most cost-effective Unhealthy diet • Salt reduction policies and strategies high impact interventions are those that sit out- • Replacing trans fats • Regulating advertising side the health sector. Although the health sector • Taxes on beverages and food plays a key role in preventing NCDs (including though • Front-of-package nutrition labeling screening and primary and preventive care) and Physical inactivity • Modifying the built environment controlling them (that is, slowing their course of dis- • School-based programs • Work-based programs ease), the interventions with the biggest “bang for the • Awareness campaigns buck” sit outside the health sector and directly target Tobacco use • Taxes on tobacco their behavioral risk factors. The WHO has identified • Plain packaging or warning labels a list of generic best buys—a set of globally proven • Banning/regulating smoking in public places cost effective solutions—to be a good starting point • Mass media campaigns raising awareness for many countries (Table 4). Several GCC countries Source: adapted from WHO 2017. Special Focus: The health and economic burden of Non-Communicable Diseases in the GCC 29 Screenshot of the Three Intervention Arms Used to Test the Country-Specific Effectiveness FIGURE 47 •  of Two Different Nutritional Labels in Saudi Arabia Arm 1 (no label) Arm 2 (warning labels) Arm 3 (Nutri-Score label) Source: Shin, S. et al. 2023 forthcoming. To find out which of the two labels works best in the carbon emissions. A shift toward healthier diets with local context, Saudi Arabia recruited a sample of the fewer animal products and less food waste can help population to shop in a specifically designed online achieve both health and environmental goals. supermarket store as part of an innovative three-arm A shift to healthier diets may also require a randomized controlled trial (RTC) study with a no-label move toward a GCC-wide nutrient profiling model arm, a Nutri-Score label arm, and a warning label arm (NPM) to help standardize the classification or (Figure 47) to test the effectiveness of the different ranking of foods according to their nutritional com- label designs in the local context. The evidence from positions. While globally such NPM models already this RTC is now assisting policy makers decide which exist, these models still need to be adapted to the label design to adopt. GCC context, drawing on the most recent evidence, Effective intervention on NCDs in the GCC local data, and regional dietary priorities and prefer- cannot work unless the rising levels of obesity ences. A GCC-specific NPM can be used to underpin are tackled head on, including through a food the implementation of all nutrition-related policies— systems approach as well as a regionally adapted such as classifying unhealthy food and beverage for nutrient profiling model. A recent book on obesity in taxation, front-of-package labeling, school sale bans, Saudi Arabia summarized many of the cost-effective and advertising restrictions, among others. Having opportunities that exist to tackle obesity, including a single GCC system can help provide consistency nutrition labels and the design of taxation on unhealthy across policies, minimize confusion, reduce admin- foods and beverages. But the GCC region has a istrative burden, and address international trade further opportunity to tackle obesity by transforming concerns (Ng et al. 2022; Alsukait et al. 2022). And it its national food systems to benefit both public health can also help the shift toward healthier diets and the goals and the environment (Ng et al. 2022, Alsukait transformation of food systems to be more environ- et al. 2022). Current food systems in the GCC, as mentally sustainable. elsewhere in the world, may not be fully sustainable What is critical in all interventions on and they currently cause significant damage to public NCDs is the importance of adopting a life course health and the environment. Production of ultra- approach to prevention and targeting the popula- processed foods and sugar-sweetened beverages tion in younger and adolescent years. Indeed, a (SSBs) contributes significantly to water use and focus on specific subpopulations susceptible to some 30 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC FIGURE 48 • Effectively Addressing NCDs: A Life Course Approach Risk No intervention Intervention for affected adults have limited effect Childhood & adolescence Late intervention An effective point to Mother & infant intervene An effective point to intervene Early intervention Life course Plasticity Inadequate response to new challenges Source: Adapted from Hanson, M A, and P D Gluckman 2014. of the main behavioral risk factors—in particular, “cata- including incentivizing pollution mitigation through lytic populations” such as adolescents and youth—will taxes and subsidies, command-and-control policies, be critical for maximizing the health and economic cap-and-trade policies, and non-pecuniary and potential of the region, now and in the future (Kaneda, non-remunerative policies such as information alert T., and S. El-Saharty 2017). Plasticity, which is the systems. These last policies are particularly relevant quality of being easily shaped or molded, decreases for households and individuals. For the pollution that with age to stabilize what has already been learned is not mitigated, some of the cost-effective strategies (Figure 48). In other words, behavioral change—to not to prevent immediate health complications, such as start or to stop smoking, or to have a healthier diet, or respiratory disease, include interventions to ensure to exercise more—is often more easily accomplished less-polluted indoor environments, filtering outdoor in younger years than in older years when habits have air with face masks, avoiding outdoor areas with espe- already fully formed. Policies need to be adopted or cially hazardous pollution levels, and raising public scaled up that target both young people and those awareness of pollution hazards when and where who influence them—online or offline—at home or they exist. At a time where the GCC region is moving elsewhere—to ensure that supportive, reinforcing toward a greener future, solutions that simultaneously interventions and programs are in place that can help impact the health of the planet and the health of the shape healthy behaviors early. population should be stepped up. In addition to addressing the behavioral Last but not least, effectively addressing risk factors, addressing the environmental risk NCDs requires a whole-of-government approach factors of NCDs—in particular, air pollution— that engages and incentivizes all key stake- requires effective key adaptation and mitigation holders, from design to implementation and measures. To further reduce ambient air pollution monitoring. While the health sector is critical for the and the implications on health and human capital, the detection, monitoring, and management of the bio- region needs to continue its focus on scaling up wide- logical risk factors of NCDs and plays a key role in the ranging policy measures. A recent paper prepared development and monitoring of NCD strategies and by the Saudi Public Health Authority (Woollacott plans, the implementation of many of the most effec- et al. 2022) has identified numerous effective tive NCD interventions sits with agencies outside the mitigation options that governments can implement, health sector (Figure 49). Therefore, engaging key Special Focus: The health and economic burden of Non-Communicable Diseases in the GCC 31 FIGURE 49 • A Whole of Government Approach to NCD Prevention Sport 08 01 Health 02 $ Local governance 07 Finance and taxation $ % NCD Prevention Media 06 03 Food and agriculture Labor 05 04 Education Source: Adapted from Alqunaibet et al, 2021. non-health stakeholders early in the development or how the taxation of unhealthy consumables can of multisectoral NCD prevention strategies and increase revenue for the ministries of finance, and ensuring their collaboration during implementation, so on—is an important part in this. Equally important monitoring, and evaluation is critical. Creating owner- are strong national multisectoral NCD governance ship among the non-health sectors and ensuring they structures, representative of all the key stakeholders, understand how they can benefit from addressing that can make use of incentives and accountability NCDs—how healthier foods in schools, for example, mechanisms for the benefit of the health and econo- can improve education outcomes and rankings, mies of the region. 32 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC BIBLIOGRAPHY A. Alqahtani, S., R. Al Ahmed, M. Hamza, S. AlEssy, Focus. Washington, DC: World Bank. https:// A. Alqunaibet, A. Al Ghammas, D. Watkins, W. doi.org/10.1596/978-1-4648-18​28-8. Msemburi, S. Pickersgill, S. Rakic, R. Alsukait, Alqunaibet, Ada, Christopher H. Herbst, Sameh C. H. Herbst, & H. M. Al-Hazzaa. Health and El-Saharty, and Abdullah Algwizani, eds. 2021. economic burden of insufficient physical Noncommunicable Diseases in Saudi Arabia: activity in Saudi Arabia. World Bank Working Toward Effective Interventions for Prevention. paper (forthcoming). Washington, DC: World Bank. doi:10.1596​ Al-Hazzaa, H. M. 2018. “Physical Inactivity in Saudi /978-1-4648-1717-5. Arabia Revisited: A Systematic Review of Alsukait, R. F., C. H. Herbst, M. Shekar, R. Menon, Inactivity Prevalence and Perceived Barriers to and M. Alluhidan. 2022. “Saudi Arabia: How Active Living.” International Journal of Health Combatting Obesity through a System-Based Science 12 (6): 50–64. https://www.ncbi.nlm​ Approach Can Save Lives.” Arab Voices (blog), .nih.gov/pmc/articles/PMC6257875/. September 26, 2022. https://blogs.worldbank​ Al-Jawaldeh, A., M. Taktouk, A. Chatila, S. .org/arabvoices/saudi-arabia-how-combatting​ Naalbandian, A-AM. Al-Thani, M. Alkhalaf, -obesity-through-system-based-approach-can​ S. Almamary, R. Barham, N. M. Baqadir, F. -save-lives. F. Binsunaid, G. Fouad, and L. Nasreddine. Al-Zalabani, A. 2020. “Cancer Incidence Attributable 2021. “Salt Reduction Initiatives in the Eastern to Tobacco Smoking in GCC countries in Mediterranean Region and Evaluation of 2018.” Tobacco Induced Diseases 18 (March). Progress towards the 2025 Global Target: A https://doi.org/10.18332/tid/118722. Systematic Review.” Nutrients 13 (8): 2676. Boettiger, D. C, T. K. Lin, M. ALmansoura, N. Theyab, https://doi.org/10.3390/nu13082676. M. M. Hamza, R. Alsukait, C. H. Herbst, and F. Alluhidan, M., R. F. Alsukait, T. Alghaith, M. Shekar, N. Alkattan. Forthcoming. “Impact of Population Alazemi, and C. H. Herbst, eds. 2022. Overweight Aging on Non-Communicable Disease Burden and Obesity in Saudi Arabia: Consequences and Costs in the Kingdom of Saudi Arabia, and Solutions. International Development in 2020–2030. 33 Delipalla, S., K. Koronaiou, J. A. Al-Lawati, M. Sayed, Young People Is the Key. Washington, DC: A. Alwadey, E. F. AlAlawi, K. Almutawaa, A. H. Population Reference Bureau. https://​ J. Hussain, W. Al-Maidoor, and Y. M. Al-Farsi. www.prb.org/wp-content/uploads/2017/12​ 2022. “The Introduction of Tobacco Excise Tax- /NCDs_MENA_Report.pdf. ation in the Gulf Cooperation Council Coun- Koronaiou, K., J. A. Al-Lawati, M. Sayed, A. M. tries: A Step in the Right Direction of Advanc- Alwadey, E. F. Alalawi, K. Almutawaa, A. H. ing Public Health.” BMC Public Health 22: 737. Hussain, W. Al-Maidoor, Y. M. Al-Farsi, and S. https://doi.org/10.1186/s12889-02​2-13190-0. Delipalla. 2020. “Economic Cost of Smok- Elmusharaf, K., D. Grafton, J. S. Jung, E. Roberts, Y. Al- ing and Secondhand Smoke Exposure in Farsi, A. A. Al Nooh, B. Bin Belaila, A. ElShamy, the Gulf Cooperation Council Countries.” H. Al-Zuabi, K. A. Al Mutawa, S. Alraisi, N. Al Tobacco Control 30 (6): 680–86. https://doi​ Lawat, A. Gharbal, S. Alomary, A. Kulikov, .org/10.1136/tobaccocontrol-2020-055715. N. Pourghazian, S. Slama, D. Tarlton, and N. Mabry, R., M. J. Koohsari, F. Bull, et al. 2016. A system- Banatvala. 2022. “The Case for Investing in the atic review of physical activity and sedentary Prevention and Control of Non-Communicable behaviour research in the oil-producing coun- Diseases in the Six Countries of the Gulf Coop- tries of the Arabian Peninsula. BMC Public eration Council: An Economic Evaluation.” Health 16, 1003 (2016). https://doi.org/10.11​ BMJ Global Health: 7 (6): e008670. https:// 86/s12889-016-3642-4. doi.org/10.1136/bmjgh​ -2022-008670. Malkin, J. D., D. Baid, R. F. Alsukait, T. Alghaith, M. Finkelstein, E. A., J. D. Malkin, D. Baid, A. Alqunai- Alluhidan, H, Alabdulkarim, A. Altowaijri, Z. S. bet, K. Mahdi, M. B. H. Al-Thani, B. Abdulla Bin Almalki, C. H. Herbst, E. A. Finkelstein, S. El- Belaila, E. Al Nawakhtha, S. Alqahtani, S. El- Saharty, and N. Alazemi. 2022. “The Eco- Saharty, and C. H. Herbst. 2021. “The Impact nomic Burden of Overweight and Obesity in of Seven Major Noncommunicable Diseases Saudi Arabia.” PLOS ONE. https://doi.org​ on Direct Medical Costs, Absenteeism, and /10.1371/journal.pone.0264993. Presenteeism in Gulf Cooperation Council Naber, H., S. Al-Duaij, and S. Guttikunda. 2016. Air Countries.” Journal of Medical Economics 24 pollution: Evidence from the Gulf Environ- (1): 828–34. https://doi.org/10.1080/136969​ mental Partnership and Action Program. 98.2021.1945242. GCC Knowledge Series. World Bank Group. Hanson, M A, and P D Gluckman. “Early developmen- https://documents1.worldbank.org/curated​ tal conditioning of later health and disease: /en/232141467995075284/pdf/104069-WP​ physiology or pathophysiology?.” Physiological -GCC-Knowledge-Series-1-final-PUBLIC.pdf. reviews vol. 94,4 (2014): 1027–76. doi:10.11​ Ng, S. W., R. F. Alsukait, M. Alluhidan, H. Algho- 52/physrev.00029.2013. daier, A. Alamri, R. Alfawaz, O. Alhumaidan, T. Hoque, R., E. Strotheide, J. Saquib, and N. Saquib. Alghaith, M. Alkhalaf, and C. H. Herbst. 2022. 2020. “Assessment of Nationally Represen- “Food Systems Approach to Nutrition Poli- tative Dietary Studies in the Gulf Cooperation cies in Saudi Arabia.” In Overweight and Obe- Council: A Scoping Review.” PeerJ 8: e10163. sity in Saudi Arabia: Consequences and Solu- https://doi.org/10.7717/pe​erj.10163. tions, edited by Alluhidan, M., R. F. Alsukait, IDF 2021. Diabetes Atlas. https://diabetesatlas.org​ T. Alghaith, M. Shekar, N. Alazemi, and C. H. /atlas/tenth-edition/. Herbst, chapter 8. International Development IHME 2019. Global Burden of Disease Database. in Focus. Washington, DC: World Bank. https://​ https://www.healthdata.org/gbd. doi.org/10.1596/978-1-4648-1828-8. Kaneda, T., and S. El-Saharty. 2017. Curbing Non- OECD 2018 (Organisation for Economic Co-operation communicable Disease Epidemic in the Mid- and Development. “OECD Stats.” https://data​ dle East and North Africa: Prevention among .oecd.org/). 34 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC OECD 2019 (Organisation for Economic Co-opera- ative analyses of 57 prospective studies. Lan- tion and Development. “OECD Stats.” https:// cet. Mar 28;373(9669):1083-96. doi: 10.1016/ data​.oecd.org/). S0140-6736(09)60318-4. OECD/FAO (2021), OECD-FAO Agricultural Outlook WHO 2016 (World Health Organization. “Global 2021–2030, OECD Publishing, Paris, https://​ Health Observatory Database.” https://www​ doi.org/10.1787/19428846-en. .who.int/data/gho). Prospective Studies Collaboration. 2009. “Body- WHO (World Health Organization). 2017. Tackling Mass Index and Cause-Specific Mortality in NCDs: ‘Best buys’ and other recommended 900 000 Adults: Collaborative Analyses of 57 interventions for the prevention and control of Prospective Studies.” The Lancet 373 (9669): noncommunicable diseases. Geneva: WHO, 1083–96. https://doi.org/10.1016/s0140–67​ Department for Management of NCDs, Dis- 36(09)60318–4. ability, Violence and Injury Prevention (NVI). Qawas, A., S. Ahli, H. Madi, and S. B. Mahagaonkar. https://apps.who.int/iris/bitstream/handle/10​ 2019. UAE National Health Survey Report 665/259232/WHO-NMH-NVI-17.9-eng.pdf. 2017–2018. Statistics & Research Center WHO 2019 (World Health Organization. “Global (SARC). https://cdn.who.int/media/docs/def​ Health Observatory Database.” https://www​ ault-source/ncds/ncd-surveillance/data-repor​ .who.int/data/gho). ting/united-arab-emirates/uae-national-health​ WHO 2020 (World Health Organization. “Global -survey-report-2017–2018.pdf?sfvrsn=86b8b1​ Health Observatory Database.” https://www​ d9_1&download=true. .who.int/data/gho). Rojas et al. 2023, Environmental burden of disease WHO (World Health Organization). 2022a. Global in the six Gulf Cooperation Council countries Health Expenditure Database (GHED). https://​ from 1990 to 2019: An analysis from the 2019 apps.who.int/nha/database. Global Burden of Disease Study. World Bank WHO (World Health Organization). 2022b. The Global Working Paper, forthcoming. Health Observatory. Geneva: World Health Rojas-Rueda, D., W. Alsufyani, C. Herbst, S. AlBa- Organization. https://www.who.int/data/gho. lawi, R. Alsukait, and M. Alomran. 2021. “Ambi- Woollacott, J., W. Alsufyani, R. H. Beach, L. T. R. Mor- ent Particulate Matter Burden of Disease in rison, A. B. de Hernández, S. Rakic, M. AlOm- the Kingdom of Saudi Arabia.” Environmental ran, R. F. Alsukait, C. H. Herbst, and S. AlBa- Research 197 (June 2021): 111036. https://​ lawi. 2022. “Effective Options for Addressing doi.org/10.1016/j.envres.2021.111036. Air Quality–Related Environmental Pub- Shin S , Alqunaibet A, Alsukait R, Alruwaily A, Abdul- lic Health Burdens in Saudi Arabia.” Heli- rahman R, Algwizani A, Herbst, C H., Shekar M, yon 8 (9): e10335. https://doi.org/10.1016​ Finkelstein E. 2023. A Randomized Controlled /j.heliyon.2022.e10335. Study to Test Front-of-Pack (FOP) Nutrition World Bank 2019 (World Bank Group. “World Devel- Labels in the Kingdom of Saudi Arabia. World opment Indicators Database.” https://dat​ Bank working paper (forthcoming). abank.worldbank.org/source/world-developm​ UN DESA (United Nations, Department of Economic ent-indicators). and Social Affairs). 2022. Population Division World Bank. 2022. World Development Indicators (2022). World Population Prospects 2022: 2021 (WDI) Database. Washington, DC: World Data Sources. UN DESA Population Division. Bank. https://datacatalog.worldbank.org/data​ (UN DESA/POP/2022/DC/NO. 9). set/world-development-indicators. Whitlock G, S. Lewington, P. Sherliker, R. Clarke, J. World Obesity. No date-a. Global Obesity Observatory: Emberson, J. Halsey, N. Qizilbash, R. Collins, Economic Impact of Overweight and Obesity: R. Peto. 2009. Body-mass index and cause- Country Comparisons. https://data.worldobes​ specific mortality in 900 000 adults: collabor- ity.org/economic-impact-new/. Bibliography 35 ANNEX 1 GCC SUMMARY STATISTICS TABLE GCC Selected Economic Indicators 2018 2019 2020 2021 2022 2023 GCC, Real GDP at Market Price, % growth 1.9 1.1 –5.1 3.2 7.3 2.5 GCC, Private Consumption, Contr to Growth % 1.3 2.0 –3.2 2.9 2.4 1.5 GCC, Govt. Consumption, Contr to Growth % 0.6 0.2 0.4 0.3 0.9 0.6 GCC, Fixed Investment, Contr to Growth % 0.2 –0.1 –1.1 1.5 1.9 1.4 GCC, Net Exports, Contr to Growth % 1.5 –1.3 –0.1 –0.5 1.6 –0.3 GCC, Current Account Balance, %GDP 8.4 5.7 –1.1 7.9 16.3 12.1 GCC, Fiscal Balance, %GDP –3.1 –3.2 –10.7 –2.0 4.3 3.2 37 ANNEX 2 COUNTRY SUMMARY TABLES Key Economic Indicators Country Summary Tables BAHRAIN SELECTED ECONOMIC INDICATORS 2018 2019 2020 2021 2022 2023E Real GDP, % change 2.1 2.2 –4.6 2.7 4.9 2.7 Hydrocarbon –1.3 2.2 –0.1 –0.3 –1.4 –0.5 Non-hydrocarbon 2.4 2.2 –5.6 3.3 6.2 3.5 CPI Inflation Rate, average, % 2.1 1 –2.3 –0.6 3.6 2.8 Government Revenues, % GDP 21.8 23.7 17.9 20.8 25.3 22.7 Government Expenditures, % GDP 33.6 32.7 35.8 31.8 28.7 27.2 Fiscal Balance, % GDP –11.8 –9.0 –17.9 –11.0 –3.3 –4.5 General Government Gross Debt, % GDP 93.9 101.6 129.7 128.5 116.1 117.8 Merchandise Exports, % nominal change 16.2 0.4 –22.4 59.0 43.1 –11.3 Merchandise Imports, % nominal change 18.9 –9.7 –17.8 23.1 26.0 –1.4 Current Account, % GDP –6.4 –2.1 –9.4 6.7 12.5 8.0 Source: World Bank, Macro Poverty Outlook, Spring 2023. 39 KUWAIT SELECTED ECONOMIC INDICATORS 2018 2019 2020 2021 2022 2023E Real GDP, % change 2.4 –0.6 –8.9 1.4 7.9 1.3 Hydrocarbon –3.8 –1.0 –9.5 –0.6 13.3 –2.2 Non-hydrocarbon 7.0 –0.3 –8.4 3.3 3.2 4.4 CPI Inflation Rate, average, % 0.6 1.1 2.1 3.4 4.3 2.6 Government Revenues, % GDP 49.3 41.6 32.4 45.2 47.7 50.7 Government Expenditures, % GDP 52.4 51.1 65.6 52.4 45.5 49.5 Fiscal Balance, % GDP –3.1 –9.5 –33.2 –7.3 2.2 1.3 General Government Gross Debt, % GDP 14.9 11.6 11.7 8.7 5.3 5.0 Merchandise Exports, % nominal change 31 –11 –37 61 56 –13 Merchandise Imports, % nominal change 5.4 –11.9 –10.2 22.3 10.0 –2.0 Current Account, % GDP 14 13 3 16 26 22 Source: World Bank, Macro Poverty Outlook, Spring 2023. OMAN SELECTED ECONOMIC INDICATORS 2018 2019 2020 2021 2022 2023E Real GDP, % change 1.3 –1.1 –3.4 3.1 4.3 1.5 Hydrocarbon 1.2 –1.5 –2.0 3.8 10.2 –3.3 Non-hydrocarbon 0.8 –0.9 –4.6 2.6 1.6 3.1 CPI Inflation Rate, average, % 0.9 0.1 –0.9 1.5 2.8 2.3 Government Revenues, % GDP 31.6 33.9 28.9 33 36.7 34 Government Expenditures, % GDP 38.3 38.8 44.5 36.2 31.3 31.5 Fiscal Balance, % GDP –6.7 –4.8 –15.7 –3.2 5.4 2.5 General Government Gross debt, % GDP 48.0 52.5 69.5 62.8 42.7 42.2 Merchandise Exports, % nominal change 26.9 –7.3 –21.2 45.2 44.5 –7.5 Merchandise Imports, % nominal change –2.0 –13.5 26.3 8.5 16.6 –1.2 Current Account, % GDP –4.4 –4.6 –16.2 –4.9 5.7 3.5 Source: World Bank, Macro Poverty Outlook, Spring 2023. 40 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC QATAR SELECTED ECONOMIC INDICATORS 2018 2019 2020 2021 2022 2023E Real GDP, % change 1.2 0.8 –3.6 1.5 4.6 3.3 Hydrocarbon –0.3 –1.8 –2.1 –0.3 0.8 1.4 Non-hydrocarbon 2.2 2.4 –4.6 2.7 6.9 4.4 CPI Inflation Rate, average, % 0.1 –0.7 –2.7 2.3 5 3.2 Government Revenues, % GDP 31.2 33.6 32.6 27.5 38.8 37.7 Government Expenditures, % GDP 28.9 32.5 34.7 27.3 30.4 31.2 Fiscal Balance, % GDP 2.3 1.0 –2.1 0.2 8.4 6.5 General Government Gross Debt, % GDP 49.8 57.0 62.7 53.9 39.7 38.4 Merchandise Exports, % nominal change 24.9 –13.5 –26.8 34.1 40.2 –6.7 Merchandise Imports, % nominal change 8.3 –5.9 –17.4 16.2 18.4 –11 Current Account, % GDP 9.1 2.4 –2.5 14.6 22.5 15.9 Source: World Bank, Macro Poverty Outlook, Spring 2023. SAUDI ARABIA SELECTED ECONOMIC INDICATORS 2018 2019 2020 2021 2022 2023E Real GDP, % change 2.4 0.3 –4.3 3.9 8.7 2.2 Hydrocarbon 0.0 –1.3 –6.6 0.2 15.5 –2.0 Non-hydrocarbon 4.2 1.3 –2.9 6.0 4.8 4.7 CPI Inflation Rate, average, % 2.5 –1.2 3.4 3.1 2.5 2.4 Government Revenues, % GDP 31 32.2 30.7 31.6 32.3 31.9 Government Expenditures, % GDP 37 36.8 41.8 33.8 29.7 30.2 Fiscal Balance, % GDP –5.9 –4.6 –11.1 –2.3 2.6 1.7 General Government Gross Debt, % GDP 19 23.0 33.7 30.9 25.7 24.6 Merchandise Exports, % nominal change 32.3 –10.5 –33.5 58.8 52.1 –7.3 Merchandise Imports, % nominal change 10.1 6.8 –9.0 11.0 20.0 7.0 Current Account, % GDP 9.0 5.0 –3.1 5.1 15.7 11.0 Source: World Bank, Macro Poverty Outlook, Spring 2023. Annex 2 Country Summary Tables 41 UNITED ARAB EMIRATES SELECTED ECONOMIC INDICATORS 2018 2019 2020 2021 2022 2023E Real GDP, % change 1.2 3.4 –6.1 3.5 6.6 2.8 Hydrocarbon 2.5 2.6 –6.0 –1.9 11.8 –2.5 Non-hydrocarbon 0.7 3.8 –6.2 5.7 4.7 4.8 CPI Inflation Rate, average, % 3.1 –1.9 –2.1 0.2 5.1 3.4 Government Revenues, % GDP 31.3 30.8 28.1 31.1 37.6 36.5 Government Expenditures, % GDP 30.1 30.4 33.3 30.8 30.2 30.3 Fiscal Balance, % GDP 1.2 0.4 –5.2 0.3 7.4 6.2 Merchandise Exports, % nominal change 2.4 –2.3 –13.0 14.7 21.5 0.1 Merchandise Imports, % nominal change –4.4 –0.9 –9.7 8.0 8.0 8.0 Current Account, % GDP 9.3 8.9 5.9 10.5 13.7 11.7 Source: World Bank, Macro Poverty Outlook, Spring 2023. 42 GULF ECONOMIC UPDATE: THE HEALTH AND ECONOMIC BURDEN OF NON-COMMUNICABLE DISEASES IN THE GCC 1818 H Street, NW Washington, DC 20433