Economy

GCC economy to grow at 4.5% in 2025 on oil support

By Pramod Kumar

December 23, 2024, 10:58 AM

Adnoc demonstrates a robotic fueling arm. The expected GCC growth will be due to higher oil production, as Opec+ has gradually liberalised production quotas in 2024

The GDP of the six Gulf Cooperation Council (GCC) countries is forecast to grow at a higher pace in 2025 to reach 4.5 percent.

While the regional GDP is expected to grow by 3.7 percent in 2024, it will stabilise at 3.5 percent in 2026, the UAE state-run Wam news agency reported, quoting a Statistical Centre for the Cooperation Council for the Arab Countries of the Gulf (GCC-Stat) report.

The expected growth by the six members – Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman – will be due to higher oil production, as the Opec+ alliance has gradually liberalised production quotas since the second half of 2024.

The growth will be supported by the development of new gas fields and the accelerated pace of economic recovery in sectors such as transportation, tourism and infrastructure projects.

The forecasts issued by the GCC-Stat also indicated improved growth in the non-oil sector, with growth reaching 4.5 percent in 2024. Non-oil sector growth will hit 3.3 percent and 4.1 percent in 2025 and 2026, respectively.

Growth will be fuelled by a rapid expansion of private sector activities, particularly in tourism, transportation, storage, and retail. Ongoing infrastructure projects across GCC countries will drive growth in associated industries and further stimulate private sector development.

The continued implementation of economic diversification strategies will also lead to significant growth in key sectors, primarily renewable energy, technology, innovation, and manufacturing.

According to GCC-Stat, inflation in the GCC countries will stand at 2.4, 2.6 and 2.1 percent for 2024, 2025 and 2026, respectively.

However, key threats are price rise of imported raw materials, higher consumption rates and public spending in all GCC countries due to the increase in employment rates, increased wages and improvement in household income.

Additionally, the monetary policies in the US, the European Union, the United Kingdom and Japan, in keeping interest rates low to curb inflationary pressures, will contribute to stabilising inflation rates in the GCC.