GCC economy to grow 4.2% by 2025-2026

December 02, 2024 (MLN): The GCC economy is expected to grow to an average of 4.2% over 2025-2026, driven by higher oil output and supported by the continued growth of the non-oil sector.

According to the Gulf Economic Update by the World Bank, the economic growth in the GCC countries remains heavily influenced by global energy markets.

Driven by ambitious reform agendas, growth in the non-oil sectors reflect the advancement of economic diversification efforts in many of the GCC countries, albeit at different paces.

Oman targets 1 million tons of green hydrogen output by 2030, the report further added.

However, the overall growth in Oman is projected to pick up over 2025-2026 to an average of 3%, also underpinned by rising oil output and ongoing reforms and investment in non-oil sectors.

Growth in Saudi Arabia is expected to accelerate to an average of 4.7% in 2025-2026 as oil production increases.

Additionally, Saudi Arabia plans to produce 650 tons of hydrogen daily by 2025.

The GDP of UAE is projected to accelerate to 4.1% in 2025 and 2026, supported by the recovery in oil production.

Qatar's economy is expected to grow 3.4% in 2025-2026. The hydrocarbon sector is expected to remain at 1.5% in 2024 due to capacity constraints, but a significant boost is anticipated between Q4 2025 and 2027 with the North Field expansion.

Bahrain's growt is projected to reach 3.3% in line with the increase in the oil sector output, by 2025-2026.

Kuwait's economic growth is projected to rise over 2025-2026 to reach 2.6% underpinned by rising oil output in addition to an acceleration of infrastructure projects.

Managing water as a strategic resource in GCC countries requires policy shifts, particularly in agriculture, to address severe water stress while balancing economic and employment impacts.

Over the past two decades, GCC countries generally adhered to countercyclical fiscal policies which played an important role in stabilizing the economy.

Redirecting investments to water-efficient sectors like renewable energy, logistics, and technology can create high-value jobs, offsetting employment losses from agricultural reforms.

However, non-economic factors such as national productivity may drive governments to maintain export-oriented agriculture, despite its unsustainable water use and potential geopolitical tensions, the report reads.

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