The Middle East is poised for a significant economic upturn, with growth projected to accelerate to 3.7 per cent in 2025, according to the latest ICAEW Economic Insight report prepared by Oxford Economics.
The region’s recovery is primarily fuelled by the reversal of oil production cuts by Opec+.
The GCC region is expected to experience a particularly strong rebound, with growth rates projected to more than double to 4.4pc in 2025. Non-energy sectors in the GCC are also showing resilience, with projected growth rates of 4.4pc in 2025. Domestic momentum and anticipated interest rate reductions are expected to boost consumption and private investment, contributing to the overall economic optimism.
While the extension of oil production cuts has led to a slight downward revision of the GCC’s 2024 growth forecast, the outlook for 2025 remains positive. The report highlights the ongoing geopolitical risks, such as regional conflicts, that could impact sectors linked to tourism and trade. However, potential breakthroughs in nuclear talks with Iran could offer upside potential for oil production and exports.
Inflation rates in the GCC are expected to remain relatively low, with a slight increase projected for 2025. Hanadi Khalife, head of Middle East at ICAEW, emphasised the importance of resilience in navigating global economic and regional challenges.
Scott Livermore, chief economist and managing director of Oxford Economics Middle East, noted that the GCC’s proactive investments in non-oil sectors and the gradual recovery of oil production are driving the region’s strong growth prospects. The report concludes that the GCC’s resilience and performance across both energy and non-energy sectors position it for sustained success in the coming year.
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