The region’s chemicals industry also accounts for almost 40% of the GCC’s total manufacturing GDP. As such, expansion in the chemical sector will continue to be a crucial component of the growing regional economy, GPCA noted in its annual report.
According to GPCA analysis, overall Gulf Cooperation Council chemical production is estimated to have grown by 1.9% to 159mn tonnes in 2022-2023.
Based on a three-year average between 2021 and 2023, GCC chemical industry output exhibited a CAGR of 3.4%.
Growth in regional output is forecasted to grow at a rate of approximately 1% in upcoming years between 2023 and 2026 based on the imminent capacity addition of existing chemical projects.
The GCC’s GDP in 2023 grew moderately by 1.5% in comparison to 2022, with an expected rebound forecasted at 3.6% this year and 3.8% in 2025, GPCA noted.
For the GCC, the chemical industry benefitted from geopolitical instability in other regions. This is due to the region being able to constitute a large portion of global chemical exports in 2022, resulting in an overall GDP growth of 7.9%.
In 2023, however, the chemical industry was negatively affected, particularly in the third quarter and fourth quarter of 2023, where Opec+ announcements of oil cuts to 2.2mn barrels per day, aimed at supporting the stability and balance of oil markets, led to a cut in chemical production in the last months of 2023.
Although the chemical industry faced difficulty, growth in the region was primarily driven by the GCC’s economic diversification efforts, GPCA noted.
Reduction in oil sector production, and subsequently, chemical industry activities, were compensated for by the non-oil sectors, which were estimated as growing by 3.9% in 2023.
“The forecasted 3.6% in 2024 and 3.8% in 2025 growth in regional GDP is an important point to note. Global GDP growth is expected to grow at mildly lower rates of 2.4% and 3% in 2024 and 2025 respectively, as projected by the IMF and OECD,” GPCA said.
Due to the GCC’s large global share in crude oil exports, expected production expansions from Opec+ are likely a factor contributing to more elevated regional GDP outlooks.
In terms of the chemical industry’s contribution to manufacturing GDP, GPCA analysis suggests that chemical industry output is directly proportional to oil prices, due to them usually following similar trends.
