The World Bank’s latest Gulf Economic Update (GEU), based on information as of June 1st, paints a positive picture for the UAE’s economy, predicting continued growth. The UAE’s economy is projected to hit 4.6% in 2025 and stabilize at 4.9% in 2026 and 2027. This growth is largely driven by its non-oil sectors, which are expected to expand by 4.9% in 2025.
Across the Gulf Cooperation Council (GCC) countries, economic growth is anticipated to rise, reaching 3.2% in 2025 and 4.5% in 2026. This expansion is attributed to robust growth in non-oil sectors. The region saw notable economic growth of 1.7% in 2024, a significant jump from 0.3% in 2023. The resilience of the non-oil sector, with a 3.7% increase, was fueled by private consumption, investment, and structural reforms.
Looking at individual GCC nations:
- Bahrain’s growth is expected to hold steady at 3.5% in 2025.
- Kuwait is set for a substantial recovery, with growth reaching 2.2% in 2025.
- Oman’s growth is predicted to gradually accelerate to 3% in 2025 (up from 1.7% in 2024), reaching 3.7% in 2026 and 4% in 2027.
- Qatar’s economic growth is expected to remain stable at 2.4% in 2025 (compared to 2.6% in 2024), before surging to an average of 6.5% in 2026–2027.
- Saudi Arabia is projected to continue its recovery, reaching 2.8% in 2025 and averaging 4.6% in 2026–2027.
The World Bank report, titled “Smart Spending, Stronger Outcomes: Fiscal Policy for a Thriving GCC,” also highlights challenges from global trade uncertainty and the risk of a global economic slowdown impacting the region. To counter these risks, it recommends accelerating reforms for economic diversification and boosting regional trade.
Safaa El Tayeb El-Kogali, Division Director for GCC countries at the World Bank, emphasized the GCC’s commitment to long-term prosperity despite global uncertainties. She stressed that “Strategic fiscal policies, targeted investments, and a strong focus on innovation, entrepreneurship, and job creation for youth are essential to sustaining growth and stability.” The report notes that government spending in the GCC has effectively stabilized economies, particularly during recessions, with a 1-unit increase in fiscal spending potentially boosting non-hydrocarbon output by 0.1-0.45 units. This finding is particularly relevant given fluctuating oil prices that can strain national budgets.
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