The Gulf region’s economy is poised to grow at a much slower pace in 2023–24 as compared to the strong energy revenue-driven performance of 2022, due to lower oil production, tighter monetary policy, and weaker global demand, but the non-oil sector will be supportive of regional growth performances.

Key highlights from the analysis include:

  • S&P Global Market Intelligence forecasts real GDP growth in the Gulf Cooperation Council (GCC) to move from 7.5% in 2022 to 1.5% in 2023 before recovering slightly to 2.1% in 2024.
  • Although energy prices have moderated and external surpluses are shrinking, the region’s hydrocarbon exporters continue to benefit from fairly decent liquidity to press ahead with investments and projects in line with their economic diversification drives and strategic priorities. The GCC hydrocarbon economy is likely to contract in real terms this year, but the non-oil and gas economy is resilient and likely to grow by 5.2% in real terms in 2023–24. 
  • Monetary policy tightening is likely to come to a halt after an expected July rate hike in line with the US Federal Reserve, but easing is not expected before 2024, according to S&P Global Market Intelligence’s current forecast assessment. Average inflation in the GCC is forecast to gradually decline to 2.9% in 2023 and 2.5% in 2024. 
  • The region’s near-term outlook is clouded with downside risks, which although not part of our base case, may be more likely to occur than upside risks at this juncture. Downside risks mostly consist of a relapse of geopolitical confrontation points if political deal talks between Iran and the P5+1 collapse, a sustained and marked drop in global energy prices squeezing liquidity around the Gulf, and sticky inflation either in the US or domestically forcing central banks to tighten further, with adverse spillovers on growth momentum in the real economy.

Please attribute any commentary/data you cite from the report to "S&P Global Market Intelligence".

Jamil Naayem, principal economist, S&P Global Market Intelligence is available for interviews to discuss this report. If you would like to speak with an S&P Global Market Intelligence economist, please contact press.mi@spglobal.com

Kate Smith
Public Relations Director
S&P Global | Market Intelligence
katherine.smith@spglobal.com