Dubai: Population across the six Gulf Cooperation Council (GCC) nations fell about 4% in 2020 amid an exodus of expatriates in the wake of the covid-19 crisis and lower oil prices, S&P Global Ratings said in a report on Monday.
The oil and gas rich region was hit hard last year as coronavirus curbs hit non-oil sectors, and lower crude prices and output cuts weighed on its key source of revenue.
“The proportion of foreigners will continue to decline through 2023 relative to the national population, because of subdued non-oil sector growth and workforce nationalization policies,” S&P said in the report.
The Gulf states rely on foreign workers in financial services to healthcare and construction sectors, but efforts to nationalize the workforce to fight rising joblessness among nationals have accelerated in recent years.
The overall GCC population may not return to 2019 levels of 57.6 million till 2023, S&P said.
“These changes could have repercussions for the regional economy and pose additional challenges to diversifying away from its heavy reliance on the hydrocarbon sector in the long run, if not met with economic and social reforms that foster human capital,” it said.
S&P estimates Dubai saw the sharpest population decline of 8.4% last year as the pandemic struck key employment sectors such as aviation, tourism and retail.
In Oman, where the government is intensifying its localization policy, known as Omanisation, to create employment for its citizens, the expat population fell 12%, the agency said.
The region’s largest economy, Saudi Arabia, saw its population shrink by 2.8% last year, and S&P estimates a growth of 0.8% by 2023.
The agency expects oil prices to remain at $50 per barrel this and next year, and to rise to $55 from 2023.
“As these levels are below the fiscal breakeven oil price for all GCC sovereigns except Qatar, we expect governments will moderate public investment spending, which is the main impetus of non-oil growth in the region,” it said.