GCC economy to stay strong amid uncertain global outlook
The GCC economy is expected to show resilience in the face of rising global protectionism and geopolitical tensions, according to the latest ICAEW Economic Insight report prepared by Oxford Economics.
Despite the uncertain global outlook, the report forecasts Middle East GDP growth of 3.3% in 2025, with GCC economies set to grow by 4%, up from an estimated 1.8% in 2024.
While President Trump's tariff policies have created uncertainty over external demand, the GCC remains largely sheltered from direct tariff impacts. The region's non-energy sectors are projected to grow by 4.4% this year, up from an estimated 3.9% in 2024, with regional PMI data firmly in expansionary territory.
Following recent Opec+ policy shifts, oil production will gradually increase from April, boosting oil-sector growth to 3.2% after two years of contraction. Saudi Arabia's, oil output is expected to reach 9.3 million barrels per day, driving oil sector growth of 1.9%, while the UAE's higher quota of 3.5 million barrels per day will support 4.8% growth.
Oil prices have fallen sharply in recent weeks due to tariff threats and increased OPEC+ supply, with prices forecast to average $70.5 per barrel this year, down from $80.5 in 2024.
Saudi Arabia and the UAE are expected to lead non-oil sector growth with 5.8% and 4.8% respectively. Tourism – the fastest-growing sector across the region in 2024 – will remain a vital engine for growth, with Saudi Arabia expecting continued expansion supported by the GCC-wide visa.
Qatar's GDP is forecast to expand by 2.1% this year, with growth expected to more than double in 2026 as additional LNG capacity comes online. The non-energy economy is projected to grow by 2.9% this year, remaining the primary growth engine.
Tourism has provided significant support to Qatar's non-energy growth, with overnight arrivals reaching 5 million by end-2024, a 23% increase on 2023. The launch of the pan-GCC visa, is expected to push visitor numbers to 5.3 million in 2025.
The fiscal surplus is forecast at QAR27.3bn (3.3% of GDP) in 2025, significantly better than the deficit of QAR13.2 billion pencilled into this year's budget.
Bahrain: The non-oil economy will continue to lead growth
Bahrain's economy is set to double its growth rate to 2.8% this year, with the non-oil economy expanding by 3.1%. The oil sector, after contracting by an estimated 2.4% in 2024, is expected to see a modest 0.9% recovery.
As part of its diversification efforts, Bahrain is establishing new industrial free zones and developing tourism infrastructure, including a $427 million waterfront project. However, persistent budget deficits and a rising debt burden above 100% of GDP pose downside risks to growth.
Hanadi Khalife, Head of Middle East, ICAEW, said: 'The business landscape across the GCC continues to demonstrate resilience and adaptability in the face of global economic uncertainty. We're seeing strong investment in key sectors like tourism and infrastructure, which are creating new opportunities for growth.'
Scott Livermore, ICAEW Economic Advisor, and Chief Economist and Managing Director, Oxford Economics Middle East, said: 'The GCC's projected 4% growth in 2025 highlights the region's ability to withstand external pressures while advancing its diversification efforts. Despite softer oil prices, the gradual easing of OPEC+ production cuts will support energy sector growth after two years of contraction.' -
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