Arab News, Thurs, Nov 23, 2023 | Jumada I 9, 1445
GCC economy set to grow 3.7% in 2025
The Gulf Cooperation Council economy is estimated to grow by 3.6 percent in
2024 and 3.7 percent in 2025, according to the World Bank.
The recent Gulf Economic Update report by the WB revealed that the GCC is
set to grow by 1 percent in 2023 before picking up in the following two
This year’s weaker performance is driven primarily by lower oil sector
activities, which are expected to contract by 3.9 percent, to reflect the
successive production cuts by the Organization of the Petroleum Exporting
Countries and its allies, known as OPEC+, and the global economic slowdown,
according to the report.
However, the reduction in oil sector activities will be compensated for by
the non-oil sectors, which are expected to grow by 3.9 percent in 2023 and
3.4 percent in the medium term, supported by sustained private consumption,
strategic fixed investments, and accommodative fiscal policy.
World Bank Country Director for the GCC, Safaa El Tayeb El-Kogali, stated:
“To maintain this positive trajectory, GCC countries must continue to
exercise prudent macroeconomic management, stay committed to structural
reforms, and focus on increasing non-oil exports.”
She added: “However, it is important to acknowledge the downside risks that
persist. The current conflict in the Middle East poses significant risks to
the region and the GCC outlook, especially if it extends or involves other
regional players. As a result, global oil markets are already witnessing
The latest issue of the GEU report, titled “Structural Reforms and Shifting
Social Norms to Increase Women’s Labor Force Participation,” stated that the
diversification efforts in the GCC region are paying off but more reforms
are still needed.
Khaled Al-Hmoud, a senior economist at the World Bank, said: “The region has
shown notable improvements in the performance of the non-oil sectors despite
the downturn in oil production during most of 2023.”
According to the report, the Saudi private sector workforce has grown
steadily, reaching 2.6 million in early 2023. Additionally, the labor force
participation of Saudi women more than doubled in six years, from 17.4
percent in early 2017 to 36 percent in the first quarter of 2023.
Non-oil sectors in Saudi Arabia are expected to cushion the contraction,
growing at 4.3 percent. The oil sector is expected to contract by 8.4
percent during 2023 to reflect oil production curbs agreed upon within the
As a result, the Kingdom’s overall gross domestic product will show a
contraction of 0.5 percent in 2023 before reporting a recovery of 4.1
percent in 2024 to reflect expansions of oil and non-oil sectors.
The report added that growth in Bahrain is estimated to moderate to 2.8
percent in 2023, while the non-oil sector remains the key driver for
The hydrocarbon sector is also expected to grow by 0.1 percent during
2023-24, while the non-hydrocarbon sectors will continue expanding at nearly
4 percent, supported by the recovery in the tourism and service sectors and
the continuation of infrastructure projects.
Kuwaiti economic growth is projected to decrease by 0.8 percent in 2023 due
to a dip in oil output. Oil GDP growth is expected to contract by 3.8
percent in 2023 but is anticipated to recover in 2024.
The non-oil sector is expected to rise by 5.2 percent, supported by private
consumption and loose fiscal policy.
Oman’s economy is estimated to slow down in 2023, but it is anticipated to
strengthen over the medium-term. Overall progression is projected to
decelerate to 1.4 percent in 2023 as oil output falls, while non-oil sectors
are expected to support growth, rising by over 2 percent.
Real GDP growth in Qatar is likely to decelerate to 2.8 percent in 2023,
maintaining this rate in the medium-term. Despite the weakening of the
construction sector and tighter monetary policy, robust growth is
anticipated in the non-hydrocarbon sectors, reaching 3.6 percent, propelled
by thriving tourist arrivals and large events.
Qatar’s standing as a global sporting hub will be further reinforced by an
additional 14 major sporting events during 2023.
Meanwhile, the hydrocarbon sector is estimated to grow 1.3 percent in 2023.
The UAE’s economic activity is anticipated to slow down in 2023 to 3.4
percent. Oil GDP growth is projected at 0.7 percent in 2023 but it is likely
to recover strongly in 2024.
On the other hand, non-oil output is forecast to support economic activity
in 2023, growing at 4.5 percent.