FAB, BMI have high hopes for the Kingdom’s growth prospects: First Abu Dhabi Bank (FAB) and Fitch Solutions’ research unit BMI penciled in predictions of Saudi Arabia’s economy growing by 4.6% and 4.4%, up from respective estimates of 1.5% and 1.3% growth in 2024, according to FAB’s 2025 Global Investment Outlook report (pdf) and BMI’s Mena Monthly Outlook (pdf). BMI’s projection would place the Kingdom as the second-best performing economy in the GCC, right after the UAE.

Driving the growth: “The non-oil economy will grow by 4.8% in 2025 as the PIF reallocates capital towards domestic projects aligning with Vision 2030 goals, providing a significant boost to investment. Meanwhile, consumers will continue to benefit from structural improvements in the labour market,” BMI said. Echoing a similar view, FAB said that the expansion of the non-oil economy is “the primary driver of real GDP growth” in the Kingdom.

Uncertainty over oil prices poses a risk: A significant dip in energy prices would cut growth by “prompting the extension of Opec+ restrictions beyond 2Q,” BMI said.

The UAE and Saudi Arabia topped FAB’s “country preference,” but the bank said it also remains optimistic about emerging opportunities in Kuwait, Qatar, and Bahrain. For FAB, the “government’s focus on value-added hydrocarbon products, clean energy initiatives and policies supporting the non-oil sector creates a positive outlook for the market.” In addition, the Kingdom's “technology-driven initiatives, spanning digitization, cloud computing, cybersecurity and space systems, continue to propel further growth.”

These predictions are more optimistic than most: The World Bank sees the Kingdom’s economy growing to 3.4% this year, while the IMF has slashed its 2025 growth predictions to 3.2% in its recent World Economic Outlook Update.

ON THE GCC FRONT-

FAB, BMI see growth doubling across the GCC this year: FAB and BMI both penciled in a prediction of growth in the GCC reaching 4.2% in 2025, up from their respective growth estimates of 1.8% and 2.1% last year.

FAB sees the growth being driven by “rising/stable oil prices and enhanced non-oil economic contributions,” with investments in tech, healthcare,financial services, and other sectors in GCC countries — particularly in the UAE and Saudi Arabia — projected to fuel future GDP growth, FAB’s report reads.

FAB’s outlook for the GCC is more optimistic than others: Emirates NBD sees headline growth in the GCC accelerating to 3.5% y-o-y this year. Meanwhile, the World Bank projected 3.4% growth for the bloc this year and 4.1% growth in 2026.

Investors cannot afford to sleep on the GCC: For the region as a whole, a “strategic focus on economic diversification, infrastructure development and technological advancement positions the region as an emerging investment hub,” FAB said, adding that equity investors can unlock significant prospects within the region. “As the GCC continues to evolve, investors will not only need to embrace its complexities, but also recognize the vast potential for growth and long-term rewards,” the report concluded.

Strong relations with Trump could bear economic fruit: “Trump holds good relations with Gulf markets' leaders, with Trump-related organizations heavily invested in Gulf markets like Saudi Arabia, the UAE and Oman. This could possibly materialise in economic and political benefits during his tenure,” according to BMI.

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