The Gulf Cooperation Council (GCC) economy is set for stronger growth over the next year as rising oil production, expanding non-oil sectors and steady domestic demand underpin the region’s outlook, according to the latest ICAEW Economic Insight Q3 2025 report produced by Oxford Economics.

Regional GDP is forecast to grow by 4.1% in 2025, almost twice the pace of last year, before accelerating to 4.6% in 2026. The report says increased oil output – alongside investment in sectors including construction, trade and finance – is helping to shield the region from global economic pressures. Meanwhile, planned expansion of gas production in Qatar is expected to further boost growth in the region in 2026.

Hanadi Khalife, Head of Middle East at ICAEW, says: “The GCC economy is 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.”

Oil rebound and non-oil resilience

Oil production is expected to lift energy-sector growth to 4.9% in 2025 and 6% in 2026, while non-oil sectors expand by 4% in 2025, supported by strong labour markets, credit growth, and an ongoing diversification programme.

Saudi Arabia’s non-oil exports grew 16.5% year-on-year in H1 2025, and the UAE recorded a near 45% increase, highlighting the GCC’s growing role in global trade. Fiscal positions are mixed: Saudi Arabia, Bahrain, Kuwait and Oman are projected to run deficits, while Qatar and the UAE maintain surpluses. Headline GCC inflation is forecast at 2.1% in 2025, rising to 2.6% in 2026.

Kuwait: fiscal reform unlocks growth

Kuwait’s GDP is forecast to grow 4% in 2025, led by a 7% increase in oil output. The passage of a new debt law ends years of political gridlock, giving the government greater fiscal flexibility to fund investment and stabilise public finances. Analysts say this breakthrough will support growth and enable longer-term diversification.

Qatar: LNG expansion fuels medium-term growth

Qatar’s economy is projected to expand 2.7% in 2025, accelerating to 4.8% in 2026 with the North Field LNG expansion, which will significantly increase production capacity and strengthen fiscal surpluses.

UAE and Saudi Arabia: diversification underpins resilience

The UAE is expected to grow 5.1% in 2025, with non-oil GDP rising 4.7% and accounting for 77% of total output. Saudi Arabia is forecast to expand 4.2%, with non-oil sectors maintaining around 5% growth, led by construction, trade and financial service.

Scott Livermore, ICAEW Economic Adviser and Chief Economist at Oxford Economics Middle East, adds: “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.”

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