World Bank: GCC region economic growth to accelerate by ’26

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By Aya Anwar

Economic growth in the Gulf Cooperation Council (GCC) region is forecast to reach 1.6 per cent in 2024, with a notable acceleration to 4.2 per cent during 2025-2026, according to the World Bank’s Gulf Economic Update.

Growth is being driven primarily by non-oil sectors, which are expected to expand at a strong rate of 3.7 per cent, reflecting ongoing diversification efforts and ambitious economic reforms across the region.

Inflation is projected to remain low at 2.1 per cent in 2024, supported by subsidies, fuel price caps, and currency pegs. However, housing sector inflationary pressures persist in certain countries. Fiscal challenges have emerged due to increased government spending and declining oil revenues, with impacts varying significantly across the region.

Country Highlights:

  • Bahrain:
    Growth is forecast to improve to 3.5 per cent in 2024, up from 3.0 per cent in 2023.
    Non-oil activities and partial recovery in oil production from the Abu Safah oilfield are key drivers.
    Growth is expected to stabilise at 3.3 per cent over 2025-2026.
  • Kuwait:
    The economy is predicted to contract by 1 per cent in 2024, attributed to extended OPEC+ output cuts.
    A rebound to 2.6 per cent is forecast for 2025-2026, supported by rising oil output and infrastructure investments.
  • Oman:
    GDP growth is projected to decelerate in 2024 due to OPEC+ production cuts.
    Growth is expected to average 3.0 per cent during 2025-2026, driven by higher oil output and non-oil reforms.
  • Qatar:
    Economic growth is anticipated to reach 2.4 per cent in 2024-2025.
    Growth is expected to rise to 4.1 per cent in 2025-2026, supported by increased gas production capacity and strong non-oil performance.
  • Saudi Arabia:
    GDP growth is projected at 1.1 per cent in 2024, following a 0.8 per cent contraction in 2023.
    Non-oil activities are expected to grow by 4.6 per cent, despite a 6.1 per cent contraction in oil GDP.
    Growth is forecast to accelerate to 4.7 per cent over 2025-2026, driven by higher oil output.
  • UAE:
    Growth is estimated at 3.3 per cent in 2024, led by a 4.1 per cent expansion in non-oil sectors such as tourism and real estate.
    Overall growth is projected to rise to 4.1 per cent in 2025-2026 as oil production recovers.

Water Scarcity Challenges:

The report highlights severe water scarcity in the GCC region, with renewable freshwater availability often falling below 100 cubic metres per capita annually. Pricing reforms, expanded wastewater reuse, and integrating renewable energy into desalination are recommended solutions. Strengthened governance and regional cooperation are also deemed essential for sustainable water management.

The GCC region’s resilience and ongoing reforms underscore its potential for robust, diversified growth. However, prudent economic and sustainability strategies are considered critical to securing a prosperous and sustainable future.

Attribution: World Bank

Subediting: M. S. Salama

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