GCC economy set for 4% growth in 2025 despite global uncertainty

The Gulf Cooperation Council (GCC) economy is projected to grow by 4% in 2025, rebounding from an estimated 1.8% growth in 2024, according to a report by ICAEW and Oxford Economics. The broader Middle East GDP is expected to expand by 3.3% this year despite ongoing global economic challenges.

Resilience amid trade tensions

While rising protectionism and geopolitical tensions have created uncertainty in global markets, the GCC remains largely insulated from direct tariff impacts. Non-oil sectors across the region are forecast to grow by 4.4% in 2025, up from 3.9% last year, driven by continued economic diversification efforts.

Following recent OPEC+ policy shifts, oil production will increase from April, boosting growth in the energy sector. Oil production in Saudi Arabia is set to reach 9.3 million barrels per day, contributing to 1.9% oil sector growth, while the UAE’s production quota of 3.5 million barrels per day will support 4.8% growth in its oil sector.

Non-oil expansion driving growth

UAE and KSA are expected to lead non-oil sector expansion. Tourism remains the fastest-growing sector, bolstered by regional visa initiatives and infrastructure projects.

Qatar’s economy is forecast to grow by 2.1% in 2025, with GDP expected to more than double in 2026 as new LNG production capacity comes online. Bahrain’s economy is set to double its growth rate to 2.8% this year, with the non-oil sector expanding by 3.1%.

Investment and diversification key to stability

According to Hanadi Khalife, Head of ICAEW Middle East, the region continues to demonstrate adaptability despite economic uncertainty, with strong investments in tourism and infrastructure driving growth.

Scott Livermore, Chief Economist at Oxford Economics Middle East, noted that the GCC’s projected 4% growth underscores its ability to withstand external pressures while advancing diversification efforts. He added that while oil prices remain softer, increased production following OPEC+ policy changes will support the sector’s recovery.