After a sluggish 2024, Gulf economies are poised to more than double their growth rate in 2025.
The Gulf economies are finally picking up speed after a bit of a slow year in 2024. They are on track to more than double their growth in 2025. The Gulf Cooperation Council is expected to see a major jump, going from a modest 1.6% growth to a robust 4.2%. This impressive acceleration is thanks to a boost in oil production and some clever diversification plans across the region.
The Gulf region’s economic trajectory will take a sharp turn upward in 2025. The GCC will see varied economic performance across 2024-2025, with growth rates expected to more than double from 1.6% to 4.2%, according to the World Bank’s latest Gulf Economic Update.
Regional Performance
Each GCC country charts its own course through economic headwinds and opportunities. The Gulf’s economic landscape in 2024 presents a mixed picture.
Saudi Arabia, the region’s largest economy, will grow by just 1.1% in 2024, hampered by a 6.1% drop in oil GDP due to extended OPEC+ production cuts. However, the Kingdom’s non-oil sector will expand by 4.6% thanks to growing momentum under Vision 2030.Â
The United Arab Emirates stands out with projected 3.3% growth in 2024, powered by a strong 4.1% expansion in non-oil activities. Tourism, real estate, construction, transportation, and manufacturing will drive this growth, according to World Bank data.
Kuwait faces challenges, with a projected 1% contraction in 2024, while Bahrain shows promise with expected 3.5% growth. Qatar’s economy will advance modestly at 2.4%.
2025: A Year of Acceleration
As oil production limits ease and diversification efforts mature, 2025 brings renewed optimism. The outlook brightens considerably for 2025. GCC-Stat forecasts overall regional growth of 4.5%, supported by increased oil production and continued economic diversification.
Saudi Arabia expects growth to surge to 4.7% in 2025-26 as oil production restrictions ease. The UAE’s growth will climb to 4.1%, maintaining its economic momentum.
Qatar will see growth reach 4.1% in 2025-26, boosted by expanded gas production capacity through the North Field project. The non-oil sector will strengthen to 3.4% growth during this period.
Banking and Financial Markets
Behind the headlines about growth rates, the Gulf’s financial foundation remains solid. The GCC’s financial sector shows underlying strength. GCC-Stat reports the banking sector’s total assets grew 8.1% to $3,207 billion in 2023, with deposits rising at the same rate to $1,905 billion.
Stock markets have performed well, with the GCC composite index rising 8% in 2023. Saudi Arabia’s market gained 14.2%, while Dubai surged 21.7%.
Inflation and Fiscal Management
While many global economies battle rising prices, the GCC maintains steady rates. Price stability remains a hallmark of GCC economies. The World Bank reports regional inflation at 2.1% in 2024, kept in check by subsidies, fuel price caps, and currency pegs. This continues the trend from 2023, when GCC-Stat measured inflation at 2.2%.
Safaa El Tayeb El-Kogali, World Bank GCC Country Director: The region has shown resilience in the face of global disruptions, moving steadily on their diversification agenda.
Global Context
The Gulf’s economic story unfolds against a backdrop of worldwide trends. The GCC’s economic trajectory aligns with broader global trends. The International Monetary Fund expects worldwide GDP growth to hold steady at 3.2% in both 2024 and 2025, while global inflation declines from 5.9% to 4.5% over the same period.
Trade and Investment
Trade patterns tell their own story about the region’s economic health. Despite anticipated growth, trade figures need monitoring. GCC-Stat data shows total commodity trade (excluding intra-trade) reached $1,482.4 billion in 2023, with exports at $823.1 billion and imports at $659.3 billion.
The region maintains its position as a global investment hub, with sovereign wealth fund assets totalling $4.4 trillion in 2023, making up 34.1% of global sovereign wealth assets.
Looking Ahead
The coming years will test the Gulf’s economic resilience and adaptability. As the GCC moves through 2024 into 2025, economic diversification continues to shape the region’s future. The contrast between slower growth in 2024 and the expected acceleration in 2025 shows how oil production decisions still affect regional economies, even as non-oil sectors gain strength.
This dual-speed growth pattern across 2024-2025 represents more than just numbers – it marks the Gulf’s ongoing evolution from pure oil dependency toward a more balanced economic model. The success of this transition will determine not just regional prosperity but also the GCC’s place in the global economic order.
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