Real growth co-movements among the GCC+2 countries: Evidence from timefrequency analysis

Business cycle synchronization has been one of the most debated issues in the Gulf Cooperation Council (GCC) countries as it is the basic requirement for the stability of a monetary union that GCC countries have sought to wish to create in 2010. In this article, we attempt to investigate whether this required condition is attained by looking at the synchronization of real growth in GCC economies. Our findings from a continuous wavelet approach show that the real growth rates in most of the countries within the GCC region comove with the others over the short and medium terms. In addition, long-term co-movement of real growth rates is only found in seven out of the 15 country pairs. In particular, the two major countries of the GCC region, Saudi Arabia and the United Arab Emirates, share common growth cycles with the remaining countries. Finally, the growth cycle in the two potential country member candidates for the GCC, Jordan and Morocco, is found to lead the one in Saudi Arabia and Bahrain, and the one in Kuwait, Qatar, and the UAE, respectively.