The Gulf Cooperation Council (GCC) region is poised for an economic resurgence, with forecasts indicating a growth of 2.8 percent in 2024 and a further acceleration to 4.7 percent in 2025. This optimistic scenario is largely attributed to the expected expansion in the gross domestic product (GDP) of the United Arab Emirates (UAE) and Saudi Arabia. A combination of increased oil production in the latter half of 2024 and a revitalized global economy are key contributors to this positive trend, as asserted by the World Bank.
According to the World Bank’s Spring 2024 Gulf Economic update, the anticipated growth is not solely reliant on the oil sector’s performance. It also hinges on the vigorous non-oil economy, which is forecasted to maintain strong growth over the medium term.
The commitment of the GCC to diversifying their economies highlights their strategic approach to fostering resilience and sustainable development during a volatile global economic period,
remarked the World Bank.
Despite strides in diversification, the World Bank acknowledges that hydrocarbon revenues will continue to play a vital role in the fiscal and external balances of the region in the coming years.
Specifically, the World Bank projects Saudi Arabia’s real GDP to rise by 2.5 percent in 2024 and an impressive 5.9 percent in 2025, with the non-oil private sector acting as the main growth engine. Meanwhile, the UAE’s real GDP is expected to grow by 3.9 percent in 2024 and 4.1 percent the following year.
For the UAE, oil production is slated to increase by 5.8 percent in 2024. Yet, it’s the non-oil sectors, including tourism, real estate, construction, transportation, and manufacturing, that are anticipated to underpin economic growth, expanding at a rate of 3.2 percent.
The report also highlights the UAE’s commitment to strategic spending on sustainable, green, and digital growth initiatives.
With a strong current account surplus pegged at 9.1 percent of GDP, the UAE’s economy benefits from a boost in non-oil exports, new investments, and trade agreements with key markets in Asia and Africa.
The financial reserves in most GCC countries remained robust in 2023, with the UAE experiencing significant growth. The report underscores the importance of the oil and gas sector, coupled with the increase in non-oil exports, which has ensured comfortable levels of financial reserves over the past years.
Furthermore, the UAE is actively implementing strategies to diversify its economy and boost industrial capabilities. Noteworthy investments include Abu Dhabi’s $10 billion in tourism infrastructure, Adnoc Gas’s $13 billion in global and local gas expansion over the next five years, and Dubai’s $10.9 billion public-private partnership portfolio.
The report concludes that the UAE has also witnessed a surge in employment figures, returning to pre-pandemic levels. Additionally, a budget of $1.74 billion has been allocated to integrate 36,000 citizens into the private sector by 2024, as part of the Emiratisation strategy.