S&P Global Market Intelligence has unveiled its economic and geopolitical outlook for 2024 and beyond in a conference titled “Daring a New Era of Uncertainty and Risks.” Apart from discussing global growth, the firm also provided insights into the oil market and supply chain, especially in the Gulf Cooperation Council (GCC) and the broader Middle East and North Africa (MENA) region.
The event was held on February 22 at Waldorf Astoria, DIFC Dubai.
On global growth
For 2024 and the coming years, there will be a gradual improvement in global growth. And according to S&P Global Market Intelligence, this will be marked by varied regional growth prospects.
The presentation showed that the Asia Pacific (APAC) region will be the main driver of growth. This comes even as mainland China could shift toward a slower pace of expansion. APAC’s share of global GDP could rise to around 45 percent by 2040.
Moreover, Sub-Saharan Africa is expected to grow comparatively strongly due to favorable demographics and inward investment. Nonetheless, it will still only account for just over 2 percent of global GDP.
Meanwhile, Western Europe is expected to face structural growth challenges due to demographics and productivity issues. This could lead to a declining share of global GDP. As of 2022, it contributed 20 percent to the global GDP.
In MENA, S&P Global Market Intelligence forecasts continued growth until 2039, showing the region’s resilience amid several economic headwinds.
Cross-cutting challenges
While a general trend of improvement is seen in global growth over time, S&P Global Market Intelligence highlighted several economic fault lines. These include regional divergence in inflation rates and monetary policies, financial stress in some regions and vulnerabilities in emerging economies.
Geopolitical reordering is another notable concern. According to S&P Global Market Intelligence, “Geopolitically, national interest objectives will influence reordering of relationships between countries and in multilateral forums. This will impact global challenges, flows of trade, and investment.”
For 2024 and the years ahead, S&P Global Market Intelligence also identified supply chain resilience as a key challenge and emphasized that uncertainties in labor, sourcing diversification, and costs will shape the evolution of reshoring within a fluid geopolitical environment.
The logistics network will also be affected by factors such as climate risks to physical infrastructure, regulatory pressures, digitization of payments and environmental challenges for shipping. In terms of resource security, S&P Global Market Intelligence noted a strategic competition over key resources like critical minerals and semiconductors.
GCC’s oil and non-oil growth
According to S&P Global data, GCC countries will collectively see consistent GDP growth from 2024 to 2025, with non-oil remaining relatively stable and as the region’s main growth engine. The region’s non-oil growth was especially pivotal in 2021, wherein the non-oil sector substantially contributed to the GCC economy’s recovery from the pandemic.
Meanwhile, oil’s contribution to the region’s economy will slightly increase from 2023 through 2025. This shows that while GCC countries reduce their reliance on oil, the sector continues to be a vital part of their economic development.
Read: UAE’s non-oil foreign trade hits $953 billion in 2023, a new high
Oil trends
In the conference, S&P Global also presented oil trends, with global oil demand growth demonstrating a possibly new trajectory following recovery from COVID-19.
After pandemic-induced disruptions in 2022, demand surged in 2023, with Africa, Latin and Middle East recording pronounced increases. However, S&P Global predicts that oil demand will slow down from 1.9 million barrels per day (mbpd) to 1.5 mbpd in 2024; then 1.1 mbpd in 2025. Relatively stable demand will be seen across most regions except North America and Europe.
In terms of supply, they foresee increased supply from non-OPEC+ countries, led by the Americas. OPEC+ includes members of the Organization of the Petroleum Exporting Countries, plus major allies led by Russia.
From 2023 to 2025, non-OPEC+ supply growth will be consistently higher than OPEC+. Nonetheless, Saudi Arabia, the United Arab Emirates (UAE) and Kuwait — known as the Gulf-3 — will have a stable crude oil production spare capacity. Spare capacity refers to a country’s additional oil production capacity beyond its current production levels. Having substantial spare capacity means that the Gulf-3 will have a buffer in case of global supply disruptions.
Supply chain disruptions
Based on S&P Global’s presentations, in Saudi Arabia, the PMI Purchase Price Index hit a 12-year high in January 2024. This indicates that the cost of inputs for domestic producers has surged. This reflects significant supply chain disruption, which companies attribute to maritime security incidents in the Red Sea. Data shows that the number of ships in the Red Sea saw a notable decrease starting December 2023 and throughout January 2024.
When looking for alternative pathways, S&P Global Market Intelligence underscores the importance of considering economic repercussions. For instance, transits via the Cape of Good Hope add at least 10 days and inflate shipping costs by more than 15 percent.
The “Middle Corridor” route could be a competitive alternative amid these disruptions. Traversing Kazakhstan, Azerbaijan, Georgia and Türkiye, this land and sea route was a compelling option in 2023, with transit times ranging from 19 to 23 days.
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