- Strong Non-Oil Sector Expansion
- Persistent Housing Inflation
- Subdued Growth in 2024
The Gulf Cooperation Council (GCC) is projected to experience accelerated economic growth, reaching 4.2% in 2025-26, following a modest 1.6% growth in 2024, according to the World Bank. The slowdown in 2024 is attributed to economic contractions in Oman and Kuwait.
Diversification Drives Growth
Growth in the region is being fueled by a robust non-oil sector, which expanded by 3.7% due to ongoing economic diversification and ambitious reforms across member states.
While overall inflation remained stable at 2.1%—aided by subsidies, fuel price caps, and currency pegs—housing inflation continues to pose challenges in some countries.
“The region has demonstrated remarkable resilience amid global disruptions, advancing steadily on its diversification agenda,” noted Safaa El Tayeb El-Kogali, the World Bank’s GCC country director. He emphasized that prudent economic policies will be key to ensuring sustainable growth.
Country-Specific Outlook
- United Arab Emirates (UAE):
- GDP growth is forecast to reach 3.3% in 2024, driven by a 4.1% expansion in the non-oil sector.
- Growth is expected to accelerate to 4.1% in 2025-26, supported by a recovery in oil production.
- Saudi Arabia:
- After a 0.8% contraction in 2023, the economy is set to grow by 1.1% in 2024, driven by a 4.6% increase in non-oil activities.
- However, oil GDP is expected to decline by 6.1% due to voluntary production cuts.
- Growth is projected to average 4.7% in 2025-26 as oil production rebounds, with non-oil sector growth remaining steady at 4.5%.
- Qatar:
- Economic growth is forecast at 2.4% for 2024-25, rising to 4.1% in 2025-26, driven by expanded gas production capacity.
- Oman:
- GDP growth is expected to slow in 2024 due to extended OPEC+ production cuts.
- Growth is anticipated to average 3% in 2025-26.
- Kuwait:
- The economy is expected to contract by 1% in 2024 but recover to 2.6% growth in 2025-26 as oil output increases.
- Bahrain:
- GDP growth is projected at 3.5% in 2024, supported by increased oil production from the Abu Safah oilfield.
- Growth is expected to average 3.3% in 2025-26, driven by higher oil sector output.
The report highlights the critical role of the non-oil sector and continued reforms in sustaining the region’s economic growth amidst fluctuating oil prices and global uncertainties.
