17-07-2025
GCC's GDP growth to see a big jump in 2025, helped by oil output hike
The aggregated real GDP growth of the six GCC countries is expected to increase significantly from 2 per cent in 2024 to 3.6 per cent in 2025, due to an increase in oil production as well as the growth of non-oil sectors, according to the latest forecast by the Institute of International Finance (IIF).
'The direct impact of higher global tariffs on the GCC is limited as oil and gas exports are exempted, and non-hydrocarbon exports from the region are relatively small. Growth will also be supported by the ongoing investments in logistics, manufacturing, renewable energy, and tourism, while inflation remains low,' said Dr Garbis Iradian, chief economist for Mena at IIF.
He said non-oil real GDP growth will remain strong at 3.9 per cent, supported by ongoing infrastructure projects and diversification efforts away from oil.
Earlier, the Central Bank of the UAE projected 3.2 per cent and 4.3 per cent real GDP growth for 2025 and 2026, respectively.
According to a Reuters survey, Opec oil output rose in June, led by Saudi Arabia after an Opec+ agreement to raise production. Opec pumped 27.02 million barrels per day in June, up 270,000 barrels from the previous month.
Moreover, Iradian noted that macro-financial risks are low due to ample foreign exchange reserves, low debt and ongoing reforms.
'The banking systems remain sound, supported by strong asset quality, ample capital and
liquidity ratios, and sustained profitability. However, lower oil prices will narrow the aggregated current account surplus from 5 per cent of GDP in 2024 to 2 per cent in 2025, and widen the fiscal deficits in Saudi Arabia, Bahrain, and Kuwait,' said Iradian.
Capital inflows/outflows
According to IIF's note 'GCC: Surge in Capital Flows', non-resident private capital inflows to the GCC economies are expected to reach $202 billion (Dh741.34 billion) in 2025 and $217 billion (Dh796.39 billion) in 2026.
'The upswing in private non-resident capital flows in 2024 was mainly driven by the continued surge in FDI in the UAE and portfolio debt flows in Saudi Arabia. In an era of geopolitical and macro uncertainties, the GCC region continues to benefit from a stable political environment, improvement in the business environment, and strong economic fundamentals,' said Dr Garbis Iradian.
Meanwhile, capital outflows from the GCC will continue to exceed nonresident capital inflows.
Due to the slowdown in the pace of resident capital outflows, IIF forecasted that the net capital outflows will decrease from a peak of $279 billion in 2022 to $12 billion in 2025, largely due to a smaller aggregated current account surplus. 'We expect FDI outflows from the GCC to increase from around $60 billion in 2024 to $110 billion by 2026, with most of the increase destined to the United States in the context of the recent mega deal signed with Saudi Arabia, the UAE and Qatar,' it said.
