Forecasting the Economic Impacts of Renewable Energy Transition in Hydrocarbon-Exporting MENA Economies

This study examines the macroeconomic implications of accelerating the renewable energy transition in hydrocarbon-exporting Middle East and North Africa (MENA) economies. Drawing on annual data from 2000 to 2024 for Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Algeria, and Oman, we estimate a panel structural vector autoregression (SVAR) that treats oil prices, global demand, and national renewable policy efforts as exogenous shocks. The model captures the dynamic interplay among non-oil GDP, government revenue, labor‑market outcomes, and renewable‑energy penetration. Impulse‑response analysis reveals that a positive renewable‑energy shock leads to sustained increases in non-oil GDP and modest reductions in unemployment, while fiscal dependence on hydrocarbons declines slightly. Scenario-based forecasts to 2035 show that countries with more ambitious renewable‑energy policies, such as the United Arab Emirates and Saudi Arabia, enjoy the largest absolute gains in non-oil GDP, whereas smaller economies still achieve meaningful proportional improvements. These findings underscore the potential of renewable investments to accelerate economic diversification and mitigate fiscal vulnerabilities. By incorporating a domestic policy index and forecasting alternative adoption paths, the study fills a gap in exporter-specific research and provides practical insights for policymakers seeking to balance growth with the energy transition.