GCC growth to surge to 4.2% in 2025-26 says World Bank

• Robust non-oil sector
• Housing inflation persists
• 2024 growth subdued

Economic growth in the GCC region is forecast to accelerate to 4.2 percent in 2025-26, but will remain subdued at 1.6 percent in 2024, as the Omani and Kuwaiti economies contract, the World Bank has said.

Growth is being driven by the non-oil sector, which has shown robust growth of 3.7 percent thanks to the ongoing diversification efforts and ambitious regional reforms.

Inflation remained low and stable at 2.1 percent during the year, supported by subsidies, fuel price caps and currency pegs. However, inflationary pressures in the housing sector persist in several countries.  

“The region has shown remarkable resilience in the face of global disruptions, moving steadily on their diversification agenda,” said World Bank GCC country director Safaa El Tayeb El-Kogali.

He said prudent economic policies will be essential to securing sustainable future growth.

Country-wise, economic growth in the UAE is expected to reach 3.3 percent in 2024, driven by a sustained expansion of 4.1 percent in the non-oil sector. GDP growth is projected to accelerate to 4.1 percent in 2025 and 2026, supported by the recovery in oil production.

Following the contraction of 0.8 percent in 2023, Saudi Arabia’s real GDP is estimated to grow by 1.1 percent in 2024 thanks to the 4.6 percent growth in non-oil activities. This will partially offset the expected 6.1 percent contraction in oil GDP.

The contraction in the oil sector is forecast due to the extension of voluntary oil production cuts.

Growth is anticipated to accelerate to an average of 4.7 percent in 2025-2026 as oil production increases. While the non-oil sector will remain critical to the country’s economic diversification agenda, the sector’s growth is expected to stay steady at an estimated 4.5 percent in 2025-2026.

Qatar’s economy is likely to grow slightly to an average of 2.4 percent in 2024-2025, reaching 4.1 percent in 2025-2026, driven by increased gas production capacity.

However, Oman’s GDP growth may decelerate in 2024, driven by repeated extension of voluntary Opec+ output cuts. Overall growth is projected to increase over 2025-2026 to an average of 3 percent.

Economic growth in Kuwait will contract by 1 percent in 2024, which is set to pick up over 2025-2026 to reach 2.6 percent as oil output surges.

Growth in Bahrain is estimated to improve in 2024 at 3.5 percent, supported by higher oil production in the Abu Safah oilfield. 

Over 2025-2026, growth may hit 3.3 percent in increase in the oil sector output, the report said.