PwC Middle East Economy Watch: GCC strong growth and ambition, balanced with fiscal prudence
Saudi Arabia is balancing fiscal prudence with ambitious investment goals to strengthen the private sector, enhance tourism and advance infrastructure, transforming in line with Vision 2030.
GCC economies broaden tax bases, introducing corporate taxes and OECD's GloBE rules from 2025.
Non-oil sector growth remains strong, with Abu Dhabi leading at 6.6% year-on-year growth in Q3 2024.
CEO confidence in economic growth remains high, with 90% of GCC chief executives expecting revenue growth in 2025.
Dubai, United Arab Emirates – The latest Middle East Economy Watch points to sustained growth across the region, driven mainly by the robust non-oil sector. Oil market volatility has prompted a renewed emphasis on fiscal discipline, particularly in Saudi Arabia, where spending is being reprioritised toward critical investments—such as major infrastructure projects in Riyadh aimed at boosting tourism and enhancing quality of life for residents. Meanwhile, GCC countries are introducing corporate tax reforms to align with OECD GloBE rules, underscoring their broader revenue diversification efforts. Despite these headwinds, business leaders remain confident about the region's economic outlook.
Richard Boxshall, Partner and Chief Economist, PwC Middle East, commented: "OPEC+ has been remarkably effective at coordinating oil production over the past decade, shaping both global energy markets and the Middle East's economic trajectory. However, there remains uncertainty over how OPEC+ will respond to evolving factors, including the Trump presidency, geopolitical developments in the region, and shifting dynamics in the oil sector. These factors intensify the need and urgency for continued non-oil sector expansion and fiscal adaptability across GCC economies.'
The report examines the following:
Economic overview and performance - OPEC+ extends oil production cuts: OPEC+ has slowed the tapering of voluntary production cuts, extending them into 2026. This move aims to stabilise oil prices amid weaker-than-expected demand, particularly from China. However, global uncertainties—including US energy policies—add to market volatility. Brent crude is expected to average in the low $70s per barrel in 2025, down from around US$80 in 2024.
Non-oil growth remains strong: Momentum in the non-oil industries continues to offset weakness in the oil sector, and is the main engine of regional economic growth. Abu Dhabi's non-oil sector recorded a 6.6% year-on-year growth in Q3 2024, led by financial services and transportation. Other GCC economies are projected to see steady non-oil GDP growth, ranging from 2.1% (Qatar) to 4.5% (UAE) in 2025.
Saudi Arabia: Balancing growth with fiscal prudence: Saudi Arabia remains committed to its Vision 2030 transformation, with over $5 trillion in active projects. The government aims to maximise the impact of public spending through a value-based approach, while maintaining strict fiscal discipline. Its primary focus is on investing in ambitious infrastructure, tourism, and renewable energy projects. This commitment is exemplified by major developments in Riyadh—such as the Riyadh Metro, New Murabba, and Diriyah Gate—as well as in other regions.
GCC expands taxation for fiscal sustainability: GCC nations are diversifying revenues by expanding taxation and adopting the OECD/G20's global minimum tax rules (Pillar Two) for large multinational enterprises. Except for Saudi Arabia that has not yet made a formal announcement, all GCC countries plan to implement the Global Anti-Base Erosion (GloBE) rules starting 2025, which is expected to raise additional tax revenue for these jurisdictions.
CEO confidence in regional growth: Findings from PwC's 28th Annual CEO Survey highlight continued optimism among Middle East business leaders, and more so than their global peers. Notably, 90% of GCC CEOs expect revenue growth in 2025, while 71% of CEOs are confident in domestic economic growth, surpassing the 57% of CEOs globally who share this sentiment.
Stephen Anderson, Partner, Middle East Strategy Leader, PwC Middle East, said: "Despite global uncertainties, the Middle East continues to demonstrate strong economic growth and resilience. Business leaders remain confident in the region's economic prospects, with non-oil sector expansion, fiscal policy reforms, and strategic investments positioning GCC economies for sustained and diversified prosperity in 2025."
While uncertainties persist—stemming from geopolitical developments and the evolving oil market—the non-oil sector remains robust and is likely to be the primary driver of growth. The strong confidence observed among regional CEOs and the continued commitment of GCC governments to invest in the long-term prosperity of the region's economies, supports a cautiously optimistic outlook for 2025.
For further insights, download the full Middle East Economy Watch – February 2025 report on PwC Middle East's website.
-Ends-
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Established in the Middle East for over 40 years, PwC Middle East has 30 offices across 12 countries in the region with around 12,000 people. (www.pwc.com/me).
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