Al Akhbar Company Report: This paper will compare the Kuwaiti, Bahraini and Qatari economies based on selected indicators such as ability to generate foreign exchange through exports, the level of debt burden, the Growth Domestic Product and the unemployment rate.
Kuwait, Bahrain and Qatar are three neighboring GCC states that have high income oil export economies. But, there are considerable differences in terms of these states’ sizes and the extent of their economic differentiation. In writing this report, Al Akhbar Company compares and contrasts three primary Gulf countries based on their economic performance.       Â
Economic Size
In this regard, Kuwait ranks first with GDP on the basis of PPP of $ 289 billion in 2020, Qatar – in the second place with $ 276 billion, Bahrain ranking third with $ 74 billion. Although oil is a major factor in the economic size of Kuwait, Qatars and Bahraint he economy of both Qatar and Bahrain have has become less oil-centric over the last decade. Qatar has especially diversified its sector dominated significantly by the production of natural gas.
Economic Growth Trends
Out of the three nations, Qatar experienced the highest proper rates of increased GDP in the last 5 years. It stands at an average of 3-4% per annum between 2017-2021,and is much higher than that of Bahrain at 2% and Kuwait’ at only 0.5% between the same years. Qatar had a relatively quicker recovery from the impact of COVID-19 because of the increase in the production of natural gas and exportation.
The two broad strategic implications that is organizational diversification and enhanced private sector expansion are useful in the management of a country’s business environment.
Bahrain is relatively more successful in diversification of its economy from oil to tourism, services, and manufacturing industries, a major 70 percent of Bahrain’s work force is in the private sector. Qatar as well has rather high diversification, or more specifically such sectors as transportation, logistics and financial services deepened the role of the private sectors in the country’s economy.
On the same note, Kuwait still mainly relies on the oil sector and governmental expenditure. However, Kuwait has launched strategies like Vision 2035 for the development of private investment in infrastructure and non-oil sectors although the pace of implementation is sluggish.
Finance and Banking Industries and their development
Bahrain has the most developed financial services industry of all the gulf economy. It boasts over 400 banks and is now regarded as the world’s financial centre of Islamic finance. Two other neigbouring countries, Qatar and Kuwait have also joined the bandwagon of liberalizing their finance sectors and investing in Islamic banking though Bahrain has remained more sophisticated in terms of banking and the number of foreign financial firms.
This is because countries when vulnerable to oil price shocks are unable to adjust price levels that are set administratively because they depend on central planning methodologies which have a quicker method of adjustment than flexible price mechanisms.
Today, all three gulf economies continue to suffer from variations in international prices for crude oil albeit to a lesser extent than before, this because of their successful attempts at diversification. Kuwait is normally the most vulnerable to the oil price volatility since the country relies on oil and government revenues to finance its budget. Other non-oil sectors of countries’ economy have been developed by Qatar and Bahrain to be less sensitive to oil fluctuations.
Finally, Kuwait’s economy is the largest; Qatar is growing faster lately, and Bahrain has been the most diverse in the financial service and private businesses sectors. All three countries have witnessed a certain progress to some extent; however they still bear certain susceptibilities especially Kuwait as it relies extremely on oil as the pillar of the state economy.