Fiscal pressure mounts on GCC due to dropping oil prices

DUBAI: Fiscal pressures on Gulf Cooperation Council (GCC) economies are mounting with dropping oil prices accelerating the need to broaden and strengthen non-oil revenues, a report said.

According to the latest Economic Insight report, private sector job creation and maintaining an inclusive labor market are crucial to achieve long term fiscal sustainability.

The report 'Economic Insight: Middle East Q1 2015' is produced by CEBR, ICAEW's partner and economic forecaster and calls for an improvement in business environments to spur job creation, private sector investment and entrepreneurship.

Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates are the member states of GCC markets.

"Delivering economic diversification and growth, alongside sustainable job creation, for a young and rapidly-growing population will be an immense test," said ICAEW Economic Adviser and Director at Centre for Economics and Business Research (CEBR) Charles Davis.

Reducing the market's dependence upon state spending to support jobs must be prioritised, especially given high rates of youth unemployment, gender imbalance within the workplace and projected growth of the region's working age population over the next 15 years.

Addressing barriers, such as gender wage gaps and provision of child care support, could greatly expand the talent pool available to economies in the region, contributing to growth and economic diversification.

Simplifying regulations, ensuring provision and reliability of vital infrastructure, supporting the flow of credit to SMEs, and establishing stable legal and tax frameworks are some of the measures demanded, and many countries have made progress.