The economic prospects for the Middle East and North Africa region have improved, with real GDP growth of 3.3 per cent projected for 2025. This improvement is driven by strong non-oil growth in GCC countries. The World Bank predicts real GDP growth in the UAE to accelerate to 3.9 per cent in 2024 due to Opec+’s oil production hike and a recovery in global economic activity. Non-oil sectors like tourism, real estate, construction, transportation, and manufacturing are expected to support economic growth by expanding at 3.2 per cent.
Despite global GDP growth projections of 2.7 per cent for this year and the next, a soft patch for growth rates is expected in the second half of 2024, with investment and global trade being hindered by high uncertainty. The Global Economic Forecast Update suggests a pick-up in growth for 2025 and 2026 as financial conditions become more accommodative. However, economists warn of a bumpy ride ahead due to an uncertain economic and policy outlook that could lead to below-potential growth.
The Institute of Chartered Accountants in England and Wales (ICAEW) highlights the GCC’s non-oil sector as the main growth driver in the region for 2024 and beyond. However, overall GDP is expected to slow to 2.2 per cent due to a projected decrease in oil output as a result of Opec+ group’s extension of output cuts through the third quarter. The extended output cuts are expected to delay the recovery in the GCC energy sectors.
The GCC growth forecast has been revised down to 2.2 per cent from 2.7 per cent, with non-energy sectors remaining resilient, particularly in Bahrain and Qatar. The World Bank has also revised its economic outlook for the GCC region, reflecting a brighter future but also acknowledging a slightly slower present. The bank predicts regional growth to reach 4.7 per cent in 2025, an upward adjustment from the previous projection of 3.8 per cent, driven by strong performance in non-oil sectors.
In conclusion, the Middle East and North Africa region are poised for economic growth in the coming years, driven by strong non-oil growth in GCC countries. Despite some challenges and uncertainties, the outlook remains positive with projections of accelerated GDP growth and resilience in non-energy sectors. Continued focus on diversification and investment in non-oil sectors will be key to sustaining economic expansion in the region.
