GCC Growth Prospects Improve As IMF Estimates 3.3% rise in 2025

The oil-exporting GCC economies stand to see, at least in the near term, a boost in output and fiscal receipts as these voluntary curbs are relaxed.

Economic outlook for the GCC has brightened, with the International Monetary Fund predicting an average GDP expansion for the region of 3.3% in 2025. According to the latest regional assessment from the IMF, the revision reflects a combination of easing oil-production restraints, improving external demand, and resilient non-oil activity across several member states. 

The core of the upgrade is an unwind of OPEC+ production cuts, which had trimmed hydrocarbon output through much of 2024. The oil-exporting GCC economies stand to see, at least in the near term, a boost in output and fiscal receipts as these voluntary curbs are relaxed. According to the IMF, the timing and scale of additional production are going to be the dominant swing factor for headline growth rates across the region. 

But the story is not all about oil. Policymakers in the leading GCC economies have doubled down on efforts to deepen non-oil sectors, from tourism and aviation in the UAE to manufacturing and services in Saudi Arabia. These structural shifts, together with substantial sovereign buffers and relatively low levels of public debt, have helped keep confidence high among businesses and investors, cushioning the region against global volatility. The IMF highlights that the reforms and public investment are supporting this diversification trend. 

That said, the upbeat central case is balanced by a number of caveats. Risks from the outside world remain material: softer global growth momentum, renewed oil-price weakness, and trade tensions could undercut the recovery. Domestically, slower-than-expected progress on reforms or mis-timed fiscal expansion would create macroeconomic imbalances. The quality of public spending – apportioning resources towards productivity-enhancing investment rather than recurrent subsidies – will be a key determinant of sustainable growth, the Fund emphasizes. 

The aggregate figure of 3.3% conceals a significant cross-country variation. Reporting by both the IMF and GCC-based media suggests that there will be divergent performances: the UAE is forecast to be one of the stronger performers, helped by robust tourism and services demand, while other economies more dependent on oil may record weaker or more volatile outcomes, depending on production decisions and price swings. This heterogeneity will continue to keep regional policymakers on their toes, particularly where job creation and private-sector dynamism remain key policy priorities. 

The implications are twofold for investors in the near term. First, an improved growth profile strengthens the investment case for GCC sovereign and corporate issuers, especially where reforms have opened up sectors to foreign capital. Second, the uneven pace of recovery underlines the merits of selective exposure-favoring diversified economies and sectors that benefit from structural initiatives such as tourism, logistics, renewable energy, and digital services. Credit-rating agencies have taken note: upgrades in some GCC sovereign ratings reflect stronger institutions and prudent fiscal management, but analysts warn that lower oil receipts can still pose fiscal strains if met with higher spending. 

IMF policy prescriptions are familiar but timely: maintain monetary frameworks consistent with existing currency pegs, preserve fiscal buffers, prioritise efficiency in public spending, and accelerate reforms that deepen private-sector activity and broaden the tax base. In this respect, the Fund’s recent policy paper on the GCC reinforced the themes of improving shock resilience, which continues to resonate as policymakers strive to meet twin goals: stabilising public finances and sustaining long-term growth. 

In all, the forecast of 3.3% is good news for a region still finding its post-pandemic normal and the shifting contours of global energy markets. But it is a projection based on conditional assumptions: on oil-policy choices, on sustained reform momentum, and on resilient external demand. For businesses and investors weighing opportunities in the Gulf, the outlook offers reasons for cautious optimism-and a reminder that nimble, selective strategies look likely to outperform blanket bets in the year ahead.