The Gulf Cooperation Council (GCC) economies are poised for stronger-than-expected growth in 2025, defying subdued oil prices and escalating global trade tensions, according to the latest Q2 ICAEW Economic Insight report compiled by Oxford Economics.
The region’s GDP growth forecast has been upgraded from 4.0% to 4.4%, marking a notable divergence from global trends. Worldwide GDP growth has been revised downward to 2.4%—the slowest rate since 2020—yet the GCC’s outlook remains resilient, bolstered by a faster rollback of OPEC+ production cuts. Oil sector growth projections for the region have been revised upward from 3.2% to 4.5%.
However, the report also highlights fiscal challenges ahead. With Brent crude prices expected to average $67.30 per barrel in 2025, many GCC states may struggle to balance budgets. Only Qatar and the UAE are projected to maintain fiscal surpluses, emphasizing the pressure on public finances.
The recently announced 10% U.S. tariff on imports from GCC countries is expected to have minimal impact, given the region’s limited export exposure to the U.S. and the exemption of energy products.
Non-oil GDP is forecast to grow by 4.1% this year, supported by robust domestic demand, strong investment flows, and continued economic diversification. The GCC is also seen as well-positioned to adapt to shifting trade dynamics and geopolitical uncertainty.
Hanadi Khalife, ICAEW Head of Middle East, noted the region’s adaptability: “GCC economies are showing remarkable resilience amid global trade shifts. Strategic investments in tourism, technology, and infrastructure are delivering long-term value.”
Scott Livermore, ICAEW Economic Adviser and Chief Economist at Oxford Economics Middle East, added: “We’ve upgraded our forecast due to faster OPEC+ output recovery and sustained non-oil momentum, especially in Saudi Arabia and the UAE. While fiscal pressures remain, the region’s leading economies continue to advance diversification and attract global capital.”
Saudi Arabia’s oil sector is now expected to grow 5.2% in 2025—up from 1.9% in March—driven by increased production averaging 9.7 million barrels per day and continued non-oil expansion, particularly in construction and trade.
The UAE’s economy is projected to grow by 5.1%, supported by a rebound in oil output, 4.7% non-oil GDP growth, deeper trade links, and expanded market access. Tourism will remain a key contributor, with international visitor spending forecast to account for nearly 13% of GDP in 2025.
Source: The Peninsula
