GCC Economies to Face Slower Growth Amid Oil Production Cuts

The Gulf Cooperation Council (GCC) economies are set for slower growth this year due to ongoing oil production cuts, with Saudi Arabia’s economy being significantly impacted, according to a poll of economists.

A survey conducted between July 8 and 22 involving 24 economists forecasts that Saudi Arabia’s economy will grow by only 1.3% this year. This marks a reduction from earlier predictions of 1.9% in April and 3.0% in January. Conversely, the United Arab Emirates (UAE) is expected to fare better, with a growth rate of 3.7%, as it ramps up oil production and emphasizes tourism. Kuwait, however, is predicted to remain in recession, while Qatar, Oman, and Bahrain are expected to grow by 2.2%, 1.6%, and 2.6%, respectively. On average, GCC economies are projected to grow by 1.9% in 2024.

Looking ahead to 2025, the outlook is more optimistic. Saudi Arabia’s economy is anticipated to expand by 4.5%, and the UAE is expected to grow by 4.2%. Additionally, the region is projected to maintain modest inflation rates, with median forecasts ranging from 1.0% to 3.0% in 2024, the lowest in Oman and the highest in Kuwait. Saudi Arabia is expected to have an inflation rate of 2.1% this year.

The International Monetary Fund (IMF) recently downgraded its growth forecast for Saudi Arabia, citing OPEC+ production cuts. The IMF now predicts a growth rate of 1.7% for Saudi Arabia in 2024, down from its earlier estimate of 2.6%. For 2025, the IMF projects a GDP growth of 4.7% for Saudi Arabia, a downward revision of 1.3 percentage points from its April forecast.

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