Headline growth in the GCC is expected to accelerate to 3.5% y-o-y this year, up from an estimated 1.6% in 2024, on the back of the continued strength from the non-oil sector, particularly in Saudi Arabia and the UAE, Emirates NBD said in its Global Investment Outlook report (pdf).

Saudi Arabia and the UAE are leading the growth: The GCC’s non-oil economy is seen growing by 4.3% this year, up from an estimated 4.0% in 2024, primarily driven by non-oil sector growth in the UAE and Saudi Arabia — where growth is projected to hit 5.0% and 4.5%, respectively. “Both countries are benefitting from growing populations, strong levels of project developments from both the public and private sectors, expanding tourism industries, and the growth of nascent tech industries,” the report reads.

REMEMBER- Emirates NBD’s forecast is only slightly more optimistic than that of the World Bank, which penciled in a prediction of 3.4% growth for the bloc this year, and 4.1% growth in 2026. The World Bank sees the Kingdom’s economy growing to 3.4%, while the IMF recently slashed its growth predictions to 3.2% in its recent World Economic Outlook Update.

Interest rates are also expected to fall, which would help increase household consumption, expand business investment, and support expansionary budgets, the report said.

Opec+ cuts could keep budgets restrained: The recent decision to extend Opec+ production cuts is expected to keep budgets in the GCC restrained, with the bank predicting the cuts to come in tandem with a 9% drop in brent futures to USD 73 per barrel, down from an estimated USD 79.9 per barrel in 2024. However, the bank sees GCC governments continuing to spend despite slowed oil revenues, causing a fiscal deficit across the bloc in 2025.

REMEMBER- Opec+ decided in December to push back the start date of production increases by three months to April 2025, with the overall production increases slated to be gradually implemented until the end of 2026.

The deficit situation: Emirates NBD sees Saudi Arabia recording a deficit in 2025, with the bank penciling in a prediction of the Kingdom’s budget deficit widening to 5.6% of GDP. Bahrain, Kuwait, and Oman are also seen recording deficits this year. Meanwhile, the UAE and Qatar are expected to record budget surpluses this year — albeit smaller than 2024.

Inflation to remain mostly unchanged: Emirates NBD expects inflationary pressures to remain constant in 2025, predicting an average 2.1% inflation rate for the second consecutive year across the bloc. The drivers of inflation across the GCC are different, with Saudi Arabia and Dubai seeing considerable increases in their housing prices — averaging almost 7% and 9% respectively between January and November. Meanwhile, the effects of disruptions to supply chains through the Red Sea and Suez Canal were more apparent in smaller economies, including those of Bahrain and Kuwait.

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