Abu Dhabi: The World Bank has projected that the UAE's economic growth will continue on an upward trajectory, reaching 4.6 percent in 2025 and stabilizing at 4.9 percent during 2026 and 2027. The World Bank confirmed that the UAE's non-oil sectors continue to play a key role as a main driver of growth, with an expected growth rate of 4.9 percent in 2025.
According to Emirates News Agency, the latest edition of the Gulf Economic Update (GEU) issued by the World Bank, which is based on information available as of June 1st, indicates that economic growth in the GCC countries is expected to rise in the medium term, reaching 3.2 percent in 2025 and 4.5 percent in 2026. Strong expansion in non-oil sectors is contributing to the growth achieved by Gulf economies.
The report noted that the region witnessed economic growth of 1.7 percent in 2024, compared to 0.3 percent in 2023. The non-oil sector continued to demonstrate resilience, with a 3.7 percent increase, significantly driven by private consumption, investment, and structural reforms implemented in GCC countries.
In Bahrain, growth is expected to stabilize at 3.5 percent in 2025, while economic growth in Kuwait is expected to recover significantly, reaching 2.2 percent in 2025. Growth in the Sultanate of Oman is expected to gradually accelerate to 3 percent in 2025, compared to 1.7 percent in 2024, and further increase to 3.7 percent in 2026 and 4 percent in 2027.
Economic growth in Qatar is projected to remain stable at 2.4 percent in 2025, compared to 2.6 percent in 2024, before accelerating to an average of 6.5 percent in 2026-2027. In the Kingdom of Saudi Arabia, the World Bank report expects economic growth to continue recovering to 2.8 percent in 2025 and reach an average of 4.6 percent in 2026-2027.
The World Bank report also highlighted the challenges associated with uncertainty surrounding global trade, noting that the risk of a global economic slowdown continues to negatively impact the region. It recommended accelerating reforms aimed at diversifying economic activity and enhancing regional trade to mitigate these risks in GCC countries.
Safaa El Tayeb El-Kogali, Division Director for the GCC countries at the World Bank, stated that the resilience of GCC countries in navigating global uncertainties while advancing economic diversification underscores their commitment to long-term prosperity. She emphasized the importance of strategic fiscal policies, targeted investments, and a focus on innovation, entrepreneurship, and job creation for youth to sustain growth and stability.
The report titled "Smart Spending, Stronger Outcomes: Fiscal Policy for a Thriving GCC" discusses the effectiveness of fiscal policy in ensuring macroeconomic stabilization and encouraging growth. This topic is particularly relevant as oil price fluctuations strain budget balances in several countries across the region. The report finds that government spending in the GCC region has effectively stabilized economies, especially during recessionary episodes, with a 1-unit increase in fiscal spending boosting non-hydrocarbon output by 0.1-0.45 units in the region.