The Gulf Cooperation Council (GCC) economies are forecast to see growth accelerate to 4 per cent in 2025 from 1.9 per cent in 2024, driven by a rebound in oil production and continued strength in non-energy sectors, according to the latest ICAEW Economic Update report.
Saudi Arabia, the region’s largest economy, is expected to see GDP growth jump to 4.4 per cent in 2025 from 1.4 per cent in 2024, supported by a projected 3.4 per cent increase in oil production and robust 4.5 per cent growth in its non-energy sector. The kingdom’s economic expansion has been constrained by OPEC+ production cuts, with oil output averaging 9 million barrels per day in recent months.
The United Arab Emirates is forecast to see economic growth accelerate to 4.5 per cent in 2025 from 3.7 per cent in 2024, according to the report. The UAE’s non-energy economy is expected to moderate slightly to 4.3 per cent growth in 2025 from 4.5 per cent in 2024, as pricing pressures and capacity constraints impact key sectors such as finance and construction.
“The direct impact of Trump’s policies on GCC growth is likely to be limited in the near term,” the report noted, though it highlighted that regional economies face broader challenges from potential US trade policies that could lead to a more fragmented global market.
The report indicates that GCC non-energy sectors are on track for steady expansion of 4 per cent in both 2024 and 2025, maintaining their role as a key driver of regional growth. This performance is supported by strong investment flows, with the UAE maintaining its position as a leading destination for foreign direct investment globally.
Oil prices, which have been volatile due to regional geopolitical tensions and demand concerns, are forecast to average $72.6 per barrel in 2025, down from the previous projection of $77.5. The ICAEW report expects OPEC+ to keep output steady until Q2 2025, as the group maintains its commitment to supporting oil prices amid weak demand.
On the fiscal front, the aggregate GCC budget position is expected to remain in surplus, thanks to continued positive balances in Qatar and the UAE. The UAE projects a budget surplus of 4.1 per cent of GDP in 2025, while Saudi Arabia is forecast to continue running deficits for the remainder of the decade, though its low government debt levels ensure continued borrowing flexibility.
Regional inflation is projected to rise to 2.3 per cent in 2025 from 1.8 per cent in 2024, with housing costs, particularly in Saudi Arabia, emerging as a key driver of price pressures.
“We expect the GCC energy sectors to drive regional growth in 2025-26 as countries gradually increase production,” the report stated, highlighting the expected shift from the current period of production constraints to expanded output.
The forecast comes as high-frequency indicators show continued economic resilience across the region. The UAE saw GDP expand by 4.1 per cent in Abu Dhabi and 3.3 per cent year-on-year in Dubai during the second quarter of 2024, while Saudi Arabia’s economy grew 2.8 per cent year-on-year in the third quarter following four quarters of decline.
Follow us on
