• The logo of the Organization of the Petroleum Exporting Countries (OPEC) is seen outside of OPEC's headquarters in Vienna, Austria, March 3, 2022. (AP)

Most Gulf Cooperation Council (GCC) economies are expected to grow at a slower pace in 2025 than previously forecast, according to a Reuters poll, as concerns about a global economic slowdown weigh on regional prospects. Despite expectations of increased oil production, the region faces rising risks that could dampen growth, primarily due to weaker global demand for oil, the main source of revenue for GCC countries.

The global economic downturn, rather than fluctuating US tariff policies, poses a greater threat to the region’s outlook. Brent crude prices have recently reached their lowest levels since the pandemic and are forecast to remain subdued throughout the year due to weaker demand and rising supply.

The Organisation of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, are expected to increase oil output next month, potentially extending production increases through June. However, this move may not be sufficient to counter the downward pressure on prices.

The International Monetary Fund (IMF) recently downgraded its growth forecast for Saudi Arabia, citing significant challenges for the broader GCC. Lower oil prices are likely to reduce both export revenues and fiscal income, leading to a more cautious economic outlook.

Saudi Arabia and UAE growth projections for 2025

According to the April 9-24 Reuters poll of 19 economists, Saudi Arabia’s economy is forecast to grow by 3.9% in 2025, a slight revision from the 4.0% predicted in January. Alina Slyusarchuk, chief CEEMEA Economist at Morgan Stanley, noted, “As global recession fears rise, a lower oil price would also weigh on Saudi exports and fiscal revenues... The outlook for the oil price has deteriorated considerably.”

Slyusarchuk added, “Given the weakening outlook for both the volumes and the prices of Saudi Arabia's key exports, we see downside risk to our growth forecast.”

The United Arab Emirates' (UAE) economy is projected to grow by 4.5%, down from a previous estimate of 5.0%, yet it remains the fastest-growing economy in the GCC.

Growth expectations for other GCC economies in 2025 are more modest. Kuwait’s economy is expected to expand by 2.5%, Qatar by 2.7%, Oman by 2.8%, and Bahrain by 2.8%.

Economists at Citi wrote, “The unexpected OPEC+ decision to boost production and fears of a global slowdown owing to sweeping U.S. tariffs carry major implications for the region.” They emphasized that the forecasts for 2025 are subject to an unusually high degree of uncertainty due to complex oil market dynamics and global economic shifts.

Inflation across the region is anticipated to remain stable, ranging between 1.2% and 2.5%. Oman is expected to have the lowest inflation at 1.2%, while Kuwait may see the highest at 2.5%. Inflation in Saudi Arabia and the UAE is projected to average 2.0%, with Qatar and Bahrain at 1.5%.