Saudi Arabia’s economic growth is set to accelerate in 2025, driven by higher oil output. Economists in a recent Reuters poll forecast robust growth for the Gulf Cooperation Council (GCC) economies. This comes after two years of modest performance, with Saudi Arabia leading the charge.
OPEC+ countries, led by Russia, have been cutting oil production since late 2022. However, they expect to increase output in December, which will boost revenues for the six GCC nations.
Crude Oil Prices Set to Remain Stable
Analysts project crude oil prices to average $76.75 per barrel in 2025, up from $74.80. This slight increase will help Saudi Arabia, the world’s largest oil exporter, maintain a competitive edge. The kingdom is reportedly moving away from its unofficial target of $100 per barrel, focusing instead on increasing market share.
Economists predict that non-oil revenue growth, alongside the rise in oil output, will further accelerate Saudi Arabia’s economy. The Oct. 9-22 Reuters poll, which included 21 economists, forecasts a 4.4% expansion for Saudi Arabia in 2025, the fastest in three years.
GCC Economies to See Widespread Growth
Experts expect the broader GCC economies to expand by 4.1% in 2025, up from 3.7% in July. This follows the 1.8% growth projected for 2024. According to Ralf Wiegert, head of MENA economics at S&P Global Market Intelligence, “Lower oil prices and higher production volumes will largely offset each other, leading to accelerated growth in 2025.”
Analysts expect the United Arab Emirates (UAE) to be the fastest-growing GCC economy, with a growth rate projected at 4.9% in 2025, up from 3.7% in 2024. Qatar’s economy is also forecasted to expand by 2.7%, rising from 2.1%.
Diversification Efforts and Long-term Outlook
Countries like Saudi Arabia, the UAE, and Qatar have been working to diversify their economies away from oil dependence. However, oil revenues remain critical. According to Wiegert, “Non-oil revenues will not fully replace oil revenues in the long term.”
James Swanston, an economist at Capital Economics, emphasized the UAE’s position in the region. “The UAE’s larger non-oil economy, led by Dubai’s tourism and financial sectors, makes it better positioned for future growth.”
Growth Projections for Bahrain, Kuwait, and Oman
Growth expectations for Bahrain, Kuwait, and Oman in 2025 stand at 2.8%, 2.5%, and 2.8%, respectively. These numbers mark an improvement from 2024, where growth was projected at 2.8%, -1.3%, and 1.6% for the same countries.
Inflation in the GCC has remained stable and is expected to stay subdued. Median forecasts for 2024 and 2025 range between 0.8% and 3.0%, reflecting a stable economic environment across the region.
