https://arab.news/nmtyj
RIYADH: The Gulf Cooperation Council is expected to see its economies expand by 4.4 percent in 2025, driven by growth in the non-oil private sector, according to a new report.
Analysis by the Institute of Chartered Accountants in England and Wales attributes this projected growth to both the rebound in oil production cuts by OPEC and the GCC’s ongoing diversification efforts.
This comes as countries across the Gulf, including Saudi Arabia and the UAE, intensify diversification efforts, with the Kingdom’s General Authority for Statistics reporting a 4.9 percent increase in non-oil sector activity in the second quarter of 2024.
The findings in the report are based on research from Oxford Economics, and Scott Livermore, ICAEW economic adviser and chief economist and managing director at Oxford Economics Middle East, said: “The GCC’s proactive and strategic investment in non-oil sectors, alongside the gradual recovery of oil production, is paving the way for robust growth in 2025, where the resilience of the GCC stands out.”
The report revised the GCC growth forecast for 2024 slightly down to 2.1 percent, from its previous projection of 2.2 percent made three months ago. However, the non-energy sector is projected to grow by 4.2 percent in 2024 and 4.4 percent in 2025.
Overall, the analysis forecasts Middle Eastern gross domestic product growth at 2.1 percent in 2024, accelerating to 3.7 percent in 2025.
The report further noted that PMI readings across the region indicate strong business growth, with anticipated interest rate cuts expected to boost consumption and private investment.
It added that tourism, trade, and finance will be key sectors driving future growth.
“Domestic momentum remains strong across the region, as highlighted by higher output in PMI surveys and the coming interest rate reductions should support both consumption and private investment,” said the report.
The document added that governments in the region will continue to advance diversification plans, with sovereign wealth funds, including Saudi Arabia’s Public Investment Fund and UAE’s Mubadala, likely to remain strategic spenders.
A recent PwC analysis indicated that easing interest rates will benefit Middle Eastern economies, particularly those with currencies pegged to the US dollar.