Saudi’s economic rebound to propel GCC growth

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Growth in the Gulf Cooperation Council (GCC) economies is forecast to increase in 2024 and 2025, propelled by a rebound in Saudi Arabia’s economy, the World Bank said in its latest Global Economic Prospects report.

The combined GDP of the GCC countries is expected to rise to 3.6 percent in 2024 and 3.8 percent in 2025.

Riyadh is anticipated to witness an economic expansion of 4.1 percent in 2024 and 4.2 percent in 2025, rebounding from a 0.5 percent contraction in 2023.

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The growth is underpinned by the kingdom’s increase in oil output and exports despite an extension of voluntary oil production cuts into this year.

The UAE’s real GDP is estimated to increase by 3.4 percent in 2023, with projections of 3.7 percent in 2024 and 3.8 percent in 2025.

The Kuwaiti economy is set to grow by 2.6 percent this year and 2.7 percent next year. The Bahraini economy is also predicted to expand by 3.3 percent in 2024 and 3.2 percent in 2025.

Qatar’s economy will likely grow by 2.5 percent in 2024, surging to 3.1 percent next year. Similarly, Oman’s economy is forecast to climb by 2.7 percent in 2024 and 2.9 percent in 2025.

Admitting to the heightened regional conflicts in the Middle East region, the World Bank revised its growth projections for the Middle East and North Africa region to 3.5 percent for both 2024 and 2025.

In Egypt, the conflict will likely exacerbate the inflation pressure, constrain activity in the private sector, and intensify pressures on external accounts through reduced tourism revenues and remittances, the World Bank said. The economy is projected to expand by 3.5 percent in 2024 and 3.9 percent in 2025.

Among other oil exporters, the expansion of crude production due to relaxed production cuts in early 2024 is projected to contribute to faster growth in Algeria and Iraq.

However, the economic outlook for the West Bank and Gaza remains highly uncertain, with growth projected to shrink by six percent in 2024, following a 3.7 percent contraction in 2023.

“Massive destruction of fixed assets in Gaza will cause a significant contraction of economic activity. The ongoing conflict will also exacerbate already-dire economic conditions in the West Bank.”

If the conflict situation de-escalates, the reconstruction efforts are expected to contribute to a rebound of growth to 5.4 percent in 2025, the report added.