Gulf economies are set to rise in 2025, on the back of oil producers unwinding their long-standing crude output cuts and the states’ strong diversification drive. 

The World Bank expects GCC’s growth to rise from 2.2% last year to 3.5% in 2025, which is 0.3% higher compared to the World Bank’s April estimates.

The new numbers mark a meaningful rebound from 2024’s modest performance, supported by stronger oil output and an increasingly dynamic non-oil economy. All six Gulf nations are expected to record faster growth next year as both sectors drive growth.

The pickup reflects two major tailwinds: the faster unwinding of OPEC+ oil production cuts and continued strength in non-oil sectors such as services, construction, and finance.

KEY INDICATORS

In Saudi Arabia, real GDP expanded by 3.9% in the first half of 2025 and is forecast to grow 3.2% for the full year, up from 2.0% in 2024, the World Bank estimates. The improvement reflects both higher crude production and the steady expansion of non-oil industries, especially in services. Growth is expected to accelerate further through 2026 and 2027 as investment and output continue to rise. 

The UAE shows a similar pattern. The economy is projected to grow by 4.8% in 2025 – nearly a full percentage point faster than in 2024 – driven by broad-based activity across finance, construction, transport, and real estate. Growth is expected to remain steady over the medium term.

Kuwait is also set for a turnaround as oil production normalises. After contracting by 2.9% in 2024, GDP is forecast to rise 2.3% in 2025 and average around 2.7% over the following two years.

Oman’s growth is expected to strengthen from 1.7% in 2024 to 3.1% in 2025, reaching about 4% by 2027, the World Bank estimates. 

Qatar and Bahrain will see more modest improvements, with growth in both economies expected to accelerate by around 0.4 percentage points in 2025. Bahrain’s expansion may ease slightly in later years, while Qatar’s outlook remains robust. The Gulf state’s liquefied natural gas (LNG) megaproject – set to boost production from the North Field by 50% – is projected to lift hydrocarbon output by 15% by 2027 and push GDP growth to a peak of 6.8% that same year. Non-hydrocarbon sectors in Qatar are also expected to benefit from rising tourism and investment spillovers from the LNG buildout.

TRADE FORECAST

Global trade showed faint signs of stabilising in the first half of 2025, but growth remains uneven and far below pre-pandemic trends, according to new data from the World Trade Organization (WTO).

Merchandise trade volumes inched up by just 1.2% compared with the same period last year, as shipping disruptions, weak demand in Europe, and a slower recovery in China continued to weigh on global flows. The WTO said trade activity picked up in some emerging markets, especially in parts of Asia and Latin America, but overall momentum remains fragile. 

On the export side, the United States and several Asian economies posted mild gains, supported by strong consumer spending and demand for electronics. But Europe’s exports fell, held back by sluggish industrial output and softer orders from China. Africa and the Middle East also saw weaker numbers, reflecting lower energy shipments and falling commodity prices. The Middle East trade volumes will grow 2% this year and slightly contract 0.9% in 2026. 

WTO economists noted that services trade, while growing faster than goods, has also cooled. The sector expanded by 6% year on year, down from double-digit growth in 2023. Air transport and tourism continued to recover, but business and financial services slowed in major markets. 

The organisation kept its full-year 2025 forecast for global goods trade growth unchanged at around 2.6%, warning that persistent geopolitical tensions and higher borrowing costs could still derail progress. 

“The global trade recovery remains hesitant,” the WTO said in its update, adding that many countries are still adjusting to new supply chain patterns and regionalisation trends that began during the pandemic years. 

Asia remains the engine of trade growth, accounting for more than half of the increase in world exports this year. The report highlighted stronger shipments from India, Vietnam, and Indonesia, particularly in machinery, electronics, and textiles. 

But the WTO also pointed to early signs of “trade fragmentation,” with countries sourcing and exporting more within their own regions. While that makes supply chains more resilient, it also slows the pace of globalisation that defined much of the past three decades.