The Gulf Cooperation Council (GCC) region’s economic growth is expected to rebound to 2.8 percent and 4.7 percent in 2024 and 2025, respectively, according to the World Bank‘s Spring 2024 Gulf Economic Update (GEU).
The report expects oil output to rebound and OPEC+ to gradually relax production cuts during the second half of 2024. Moreover, it expects the region’s non-oil economy to build strong momentum in the medium term, which will support economic growth.
Despite diversification efforts, oil production remains crucial in shaping the GCC region’s fiscal and external balances in the medium term. Therefore, the report expects the GCC’s fiscal surplus to narrow in 2024, reaching 0.1 percent of the gross domestic product (GDP). Meanwhile, the current account surplus should reach 7.5 percent of GDP, down from 8.4 percent in 2022.
GCC countries outlook
The World Bank report also shares insights into the economic growth outlook of each GCC state. In Bahrain, the World Bank expects growth to pick up to 3.5 percent in 2024 in line with higher oil output. It also expects the country’s oil sector to expand by 1.3 percent in 2024, below the non-oil sectors’ growth forecast of almost 4 percent.
In Kuwait, the report expects economic growth to recover to 2.8 percent in 2024 due to expansionary fiscal policies, higher oil production, and increased output from Al Zour refinery. It also expects the country’s non-oil sector to grow by 2.1 percent.
Meanwhile, Oman’s economic growth outlook remains favorable, with real growth expected to reach 1.5 percent in 2024 due to increased gas production and diversification efforts.
In Qatar, the report expects real GDP to strengthen marginally in 2024 but remain modest at 2.1 percent. Non-oil growth will continue to be strong at 2.4 percent due to the country’s growing tourism sector. Meanwhile, the bank expects the hydrocarbon sector to decline to a 1.6 percent growth in 2024 due to capacity constraints.
Saudi Arabia and UAE
Following the contraction Saudi Arabia witnessed in 2023, real GDP should grow by 2.5 percent in 2024 with support from the country’s robust non-oil private sector, which is forecast to grow by 4.8 percent. As for oil GDP, the report expects it to decline by 0.8 percent in 2024 before surging to 5.9 percent in 2025.
Finally, the report expects the UAE’s economy to grow 3.9 percent in 2024 on higher oil production. The World Bank expects oil output growth to reach 5.8 percent in 2024. Meanwhile, non-oil output will remain robust, expanding at 3.2 percent. Hence, the UAE has shown strong performance in the tourism, real estate, construction, transportation and manufacturing sectors.
Education quality vital for GCC economic growth
The World Bank report highlights the importance of education quality in fostering long-term economic growth in GCC countries. Quality education will build on the region’s current diversification momentum and allow them to realize their full potential.
In her remarks, the World Bank’s GCC country director Safaa El-Tayeb El-Kogali stated: “Over the last decade, GCC countries have significantly improved learning outcomes. Yet, there is still scope for GCC countries to further improve in learning outcomes as they lag behind international benchmarks.”
The report states that the quality of education in the GCC region is a major factor that is holding back human capital development and the ability of GCC countries to compete at the global level with top-performing countries. According to the World Bank’s Human Capital Index, children born today in the GCC could reach only 62 percent of their full potential productivity mainly due to the low education quality.
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