• Kuwait: Growth of 4% in 2025, supported by oil gains and new debt law unlocking fiscal flexibility
  • Qatar: Economy projected to expand 2.7% in 2025, accelerating to 4.8% in 2026 on North Field LNG expansion
  • UAE and Saudi Arabia: Non-oil sectors continue to drive diversification, supporting broader regional resilience

United Arab Emirates: The GCC is set for stronger growth in 2025 and 2026, as higher oil output, robust non-oil sectors, and resilient domestic demand strengthen the region’s outlook, according to the latest ICAEW Economic Insight Q3 2025 report, produced by Oxford Economics.

GCC GDP is forecast to grow by 4.1% in 2025, nearly double last year’s pace, before accelerating to 4.6% in 2026. The trajectory reflects both oil and non-oil gains, reinforcing the region’s resilience to global trade tensions, tariff headwinds and softer oil prices.

GCC: Oil rebound, non-oil resilience and fiscal contrasts

The sharp increase in oil production has lifted energy-sector growth forecasts to 4.9% in 2025 and 6% in 2026. Non-oil sectors are also expected to expand by 4% in 2025, driven by strong labour markets, credit growth and continued diversification efforts.

While global GDP growth is expected to slow to 2.7% in 2025, the GCC remains an outperformer. Saudi Arabia’s non-oil exports rose 16.5% y/y in H1, while the UAE recorded a surge of nearly 45% y/y, underscoring the region’s growing role in global trade. Fiscal positions remain mixed: deficits are forecast in Saudi Arabia, Bahrain, Kuwait and Oman, while Qatar and the UAE are projected to maintain surpluses. Headline GCC inflation is projected at 2.1% in 2025, rising moderately to 2.6% in 2026.

Kuwait: Political breakthrough supports fiscal reform

Kuwait’s GDP is expected to grow 4% in 2025, fuelled by a 7% expansion in the oil sector. Crucially, the passage of a new debt law has ended years of political gridlock, giving the government greater fiscal flexibility to finance investment and stabilise public finances. This reform marks an important step in sustaining growth while enabling longer-term diversification.

Qatar: LNG expansion anchors medium-term growth

Qatar’s economy is forecast to expand 2.7% in 2025, before accelerating to 4.8% in 2026 with the expansion of the North Field LNG projects, which will significantly boost production capacity and fiscal surpluses.

UAE and Saudi Arabia: Non-oil momentum supports diversification

Beyond oil, the region’s largest economies continue to demonstrate the role of diversification in sustaining resilience. The UAE economy is set to grow 5.1% in 2025, with non-oil GDP rising 4.7%, now accounting for 77% of total GDP. Meanwhile, Saudi Arabia is forecast to expand 4.2%, with non-oil sectors sustaining annual growth of around 5%, driven by construction, trade, and financial services. Together, these dynamics show how non-oil growth momentum is shaping the GCC’s broader economic outlook.

Hanadi Khalife, Head of Middle East, ICAEW, said: “The GCC economies are showing that diversification is more than policy. It is a measurable driver of resilience. With non-oil sectors powering growth momentum in Saudi Arabia and accounting for the majority of GDP in the UAE, alongside fiscal reforms in Kuwait, the region is successfully turning global challenges into opportunities for transformation.”

Scott Livermore, ICAEW Economic Advisor, and Chief Economist and Managing Director, Oxford Economics Middle East, said: “The GCC is not only recovering from oil production cuts; it is reshaping its growth model. While Kuwait’s fiscal reforms and Qatar’s LNG expansion provide confidence in the medium term, recent geopolitical escalations involving Qatar, and Gulf leaders’ recognition of its right to respond, add some uncertainty to the near-term outlook. Even so, the region’s mix of reforms, energy growth, and strong non-oil diversification positions it to outperform global peers.”

Media enquiries:
Layth Kamal, Mojo PR, on email icaew@mojo-me.com

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