The GCC region’s economies will more than double their growth rate from 1.9 percent in 2024 to 4 percent in 2025, according to the latest ICAEW Economic Insight report by Oxford Economics. This acceleration comes despite the extension of OPEC+ oil production cuts, positioning the GCC to significantly outperform global GDP growth, which will likely increase modestly from 2.7 percent in 2024 to 2.8 percent in 2025.
The GCC’s energy sector is gearing up for a strong rebound in 2025, with growth of 4.2 percent following the gradual unwinding of oil production cuts, supporting the economies’ outlooks. Meanwhile, the non-energy sectors will maintain their robust performance, with consistent expansion near 4 percent in both 2024 and 2025.
“The business landscape across the GCC continues to evolve and mature, creating new opportunities for growth and innovation. As professional services advisors, we see firsthand how businesses are adapting to change and investing in their future,” stated Hanadi Khalife, head of Middle East at ICAEW.
Saudi Arabia’s GDP to grow 4.4 percent
Regional PMIs remain firmly in expansionary territory, with Saudi Arabia’s PMI reaching a six-month high of 56.9, demonstrating strong business confidence and domestic activity. Saudi Arabia’s economic growth economy is projected to accelerate from 1.4 percent growth in 2024 to 4.4 percent in 2025. The robust non-energy sector expansion of 5.8 percent will drive this growth.
The Kingdom has witnessed a significant recovery, with GDP growing 2.8 percent year-on-year in Q3 2024, following four consecutive quarters of decline. The tourism sector’s ambitious $800 billion investment program over the next 10 years, alongside major events like Expo 2030 and FIFA World Cup 2034, underpin the country’s diversification efforts.
“The GCC’s projected 4 percent growth in 2025 highlights the success of the region’s diversification efforts amid global challenges,” stated Scott Livermore, ICAEW economic advisor, and chief economist and managing director, Oxford Economics Middle East.
UAE tourism sector to drive growth
The UAE economy is also set to grow from 3.7 percent in 2024 to 4.5 percent in 2025. However, the report expects non-energy sector growth to moderate slightly from 4.5 percent to 4.3 percent due to capacity constraints in key sectors.
The country’s success in attracting investment is evident in its $16 billion greenfield foreign direct investments, maintaining its global leadership position in FDI relative to GDP. Tourism will continue to drive growth, with Dubai visitor arrivals increasing 6.3 percent year-on-year in the first nine months of 2024.
“As the region continues to expand its tourism, real estate and financial sectors; managing capacity constraints in these high-growth sectors, as well as navigating global uncertainties, will be key to sustaining momentum and long-term economic stability,” added Livermore.
GCC demonstrates fiscal strength
Despite challenges stemming from lower oil revenues, GCC economies continue to maintain an overall budget surplus, with Qatar and the UAE emerging as leaders in fiscal strength. Saudi Arabia, while anticipating budget deficits, benefits from low government debt levels, ensuring the flexibility to pursue strategic investments. The UAE’s projected 4.1 percent budget surplus in 2025 demonstrates its strong fiscal management.
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Inflation to rise moderately
GCC inflation will likely rise moderately from 1.8 percent in 2024 to 2.3 percent in 2025, remaining well under control across the region. Following the U.S. Federal Reserve’s 75 basis points rate cuts in September and November this year, GCC central banks have mirrored these adjustments, with further reductions likely to boost real estate and private-sector investment.
