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Gulf Arab oil producers basked in an economic euphoria in 2025 and next year could be even better thanks to their galloping non-oil sectors.
Saudi Arabia and the UAE, the largest Arab economies, appear to be spearheading the region’s strong performance as they pushed ahead with a gigantic investment programme in their infrastructure and other non-hydrocarbon sectors.
The International Monetary Fund (IMF), the World Bank and other prestigious global organisations have presented slightly varied growth forecasts for the Gulf Cooperation Council (GCC) states during 2025-2026 but almost all of them agree that the six members are experiencing a good economic and financial era.
Although they are among the world’s largest capital exporters, the six nations are expected to receive a whopping foreign investment flow of $460 billion in 2025-2026, the Washington-based Institute of International Finance (IIF) has reported.
Sitting atop more than a quarter of the world’s extractable oil resources, the GCC countries are also projected to record GDP growth of around four percent during 2025-2026 against 2.5 percent in 2024, the IIF said.
Growth to accelerate
Growth will accelerate due to higher oil output, investment in logistics, manufacturing, renewable energy, tourism, and economic diversification in the six members—Saudi Arabia, Bahrain, Qatar, Kuwait, Oman and the UAE.
“Growth across the GCC is set to accelerate meaningfully over the next two years as past oil production cuts unwind and non-hydrocarbon activity remains strong…. Infrastructure spending and reform momentum should boost non-hydrocarbon GDP by 4.2 percent,” the IIF added.
Its estimates seem somewhat conservative as other global institutions see growth of higher than four percent during 2026.
In a report this month, the Institute of Chartered Accountants in England and Wales (ICAEW) forecast growth in the GCC economies at 4.4 percent in 2026.
Oil sector growth
It said that despite OPEC Plus’ decision to pause production increases in the first quarter and probably through the first half, the GCC oil sector will still expand by around 5.1 percent next year, the same as in 2025.
“We see growth prospects for the GCC non-energy sectors remaining positive with the projected pace of expansion inching up slightly to 4.1 percent in 2026 from a likely four percent this year,” ICAEW said.
Saudi and other GCC members
ICAEW forecast Saudi Arabia’s GDP growth at around 4.3 percent in 2026, slightly below the expected 4.5 percent growth in 2025.
“We expect growth momentum in Saudi Arabia to strengthen to 4.5 percent in 2027, supported by increased oil production and non-oil sector expansion.”
Turning to the UAE, ICAEW predicted GDP growth to pick up to 5.6 percent in 2026, from an estimated 4.9 percent in 2025.
“We see the economy being driven by strong non-oil growth in key areas such as tourism, trade, and financial services, alongside a rebound in oil output as OPEC Plus quotas ease again in the second half of next year.”
As for Kuwait, the World Bank in its December report said GDP growth is turning positive this year after contractions in 2023 and 2024.
It said the recently passed debt law is a constructive step toward easing fiscal pressures, adding that it expects real GDP to grow 2.7 percent in 2025.
In gas-rich Qatar, growth is projected by the World Bank at 2.8 percent this year and 6.1 percent in 2026. “The North Field expansion will significantly boost LNG output, reinforcing Qatar’s role in global markets,” it said.
In Oman, diversification is gaining pace, with non-hydrocarbon sectors increasingly driving growth, the Bank said, noting that real GDP is projected to expand by 3.1 percent in 2025, with further acceleration in the medium term.
Growth in Bahrain remains robust, propelled by non-oil sectors—especially financial services and tourism, the Bank said.
“Infrastructure, gas, logistics, fintech, and tourism investments support the medium-term outlook, though high deficits and elevated public debt sustain fiscal pressures. Real GDP is projected to grow 3.5 percent in 2025.”
Projects
On the projects front, Saudi Arabia was the GCC region’s top spender in 2025, with a value of more than $2 trillion, according to a report by the Kuwait-based Kamco Invest.
The UAE came second, followed by Kuwait, the report said, adding that there was a significant increase in project value in the three countries.
The value of planned and ongoing projects in Saudi Arabia was estimated at around $2.05 trillion in 2025 compared to $1.91 trillion in 2024, the report said. The UAE ranked second with $1.14 trillion in planned and ongoing projects, compared to $878.3 billion in 2024.
In Kuwait, the value of planned and ongoing projects increased to around $220.9 billion from nearly $195 billion in 2024.
The value of projects in Oman increased to $333.3 billion from $248.1 billion while that in Qatar grew to $251 billion from $237 billion. In Bahrain, the value declined to $52 billion from $62 billion, the report said.
(Writing by N Saeed; Editing by Anoop Menon)
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