Al-Shall Consulting Company’s weekly report reviewed a brief assessment issued by the World Bank on the 4th of this month, which outlined expectations for the performance of Gulf Cooperation Council (GCC) economies in 2025.
The World Bank’s overall conclusion indicates that GCC economies have returned to a path of recovery, advanced their income diversification projects, and entered a more mature phase of digital transformation.
Building on the World Bank’s country-by-country growth projections, Al-Shall calculated expected growth for the combined GCC economy and concluded that aggregate growth in 2025 is likely to reach approximately 3.8 percent.
This outlook is largely driven by stronger growth prospects in Saudi Arabia, the region’s largest economy, and the United Arab Emirates, its second largest.
The report noted that Kuwait is expected to record the lowest growth rate among GCC economies, at around 2.7 percent, following economic contractions in 2023 and 2024. Growth prospects are mainly supported by increased oil export levels.
At the national level, the UAE is expected to record the highest growth rate among GCC peers at around 4.8 percent, supported by continued balanced expansion across both oil and non-oil sectors, as well as strong performance in export diversification.
Saudi Arabia follows with an expected growth rate of approximately 3.8 percent, reflecting ongoing progress in its oil and non-oil sectors, despite the negative impact of rising public debt, which has reached around 32 percent of GDP as a result of financing fiscal deficits.
In this context, the report cited statements by Saudi Arabia’s Minister of Finance during the presentation of the new state budget, in which he downplayed the risks associated with higher debt levels, provided that borrowing is directed toward projects that support economic diversification and generate stronger long-term returns.
Bahrain ranks third in terms of expected growth, with a projected rate of about 3.5 percent, driven primarily by expansion in the non-oil sector, particularly tourism, tourism-related investments, infrastructure projects, and advanced financial services. However, this growth remains constrained by high public debt levels and persistent fiscal deficits.
Among the remaining GCC states, Oman leads with an estimated growth rate of around 3.1 percent, supported by robust non-oil sector performance. The report expects this momentum to continue in the medium term for the same reason.
Qatar follows with a projected growth rate of approximately 2.8 percent, underpinned by the strength of its non-oil economy, despite lower oil and gas prices, in addition to solid external balances, ongoing investment in the expansion of the North Field gas project, and continued budget surpluses.
Al-Shall also reiterated Standard & Poor’s assessment issued in late November, which stated that the enactment of Kuwait’s public debt law would allow the government to borrow in order to finance its needs, without specifying the channels through which the borrowed funds would be utilized.
While this development is considered positive for Kuwait’s lenders, the report noted that it does not directly support economic growth or the diversification of government revenue sources.
