Saudi Arabia’s economy is set to grow by 4.4% next year, accelerating to the highest in three years from 1.3% growth expected for 2024, as OPEC+ is set to begin unwinding its oil production cuts in December, a Reuters poll of economists showed on Wednesday.
On average, the economies of the six members of the Gulf Cooperation Council (GCC) – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – are expected to grow by 4.1% in 2025, compared to an expected 1.8% growth for this year and higher than the average estimate of 3.7% growth for 2025 in the July Reuters poll.
The expected gradual reversal of the oil production cuts from the OPEC+ group, whose key members include Saudi Arabia and the UAE, is set to boost the Gulf economies next year, propelling them to the fastest growth in GDP in years, according to various analyst estimates.
Saudi Arabia’s economy contracted in the second quarter of 2024, for the fourth consecutive quarter of contraction of Saudi GDP, as the world’s biggest crude oil exporter is cutting output by around 1.5 million barrels per day (bpd), including a 1-million-bpd voluntary output reduction.
Despite the stagnant oil prices and evidence of weaker-than-expected global demand growth, OPEC+ is currently intent on starting to reverse the cuts in December and complete the unwinding in September 2025, all this depending on market conditions.
A gradual return of the halted oil production would greatly benefit the Saudi and UAE economies next year.
Per the Reuters poll, the UAE economy will be the fastest-growing one in the GCC, with GDP rising by 4.9% next year.
The UAE’s oil sector is set to rebound with strong growth of 7.8% next year, as OPEC+ will begin unwinding its oil production cuts, the National Bank of Kuwait said last week in its latest macro outlook on one of OPEC’s biggest producers.
For Saudi Arabia, the International Monetary Fund (IMF), which had already lowered its Saudi growth forecast in July – cut again this week its expected GDP growth for 2025 from 4.7% to 4.6%. In its World Economic Outlook, the fund also revised down its projection of Saudi economic growth for this year to 1.5%, down by 0.2 percentage points compared to the July update.
By Tsvetana Paraskova for Oilprice.com