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Saudi Arabian Economic Growth to Accelerate in 2025 as Oil Taps Open

Saudi Arabian economic growth is expected to accelerate to 4.4% in 2025 due to higher oil output. Learn about the projected growth in Saudi Arabia and GCC economies.

BENGALURU (Reuters) – Saudi Arabian economic growth is forecasted to accelerate in 2025, fueled by increased oil production after two years of modest performance. According to a Reuters poll of economists, this growth will coincide with robust economic performance across the Gulf Cooperation Council (GCC) states, marking a significant improvement over the past few years.

Since late 2022, OPEC+—which includes the Organization of the Petroleum Exporting Countries and its allies like Russia—has reduced oil production. However, production is expected to rise in December 2024, bolstering revenues for the six GCC nations, including Saudi Arabia.

Crude oil prices are predicted to average $76.75 per barrel next year, an increase from the current $74.8, based on another Reuters poll. As the world's largest oil exporter, Saudi Arabia is set to shift from its previous $100-per-barrel target. This change will allow the kingdom to reverse production cuts, gain market share, and significantly contribute to Saudi Arabian economic growth in 2025. Non-oil revenue growth is also anticipated to play a crucial role in boosting the economy.

The Reuters poll, conducted from October 9-22, included insights from 21 economists who forecast that the Saudi Arabian economy will expand by 4.4% in 2025, marking the fastest rate in three years. This growth rate is up from an expected 1.3% in 2024.

Growth Forecast for GCC Economies and Saudi Arabian Economic Growth

Across the GCC, economic expansion is anticipated to reach an average of 4.1% in 2025. This is an improvement from the 3.7% forecast in a July poll and is significantly higher than the projected 1.8% growth for 2024. The rise in oil production is expected to drive this growth, with Saudi Arabian economic growth leading the way.

"We expect the impact of lower oil prices to be largely offset by higher production volumes. Since the focus is on production, real GDP growth will benefit and accelerate in 2025 compared to 2024," said Ralf Wiegert, head of MENA economics at S&P Global Market Intelligence.

Key economies like Saudi Arabia, the UAE, and Qatar are continuing to diversify their revenue sources to reduce dependency on oil. Economists predict that non-oil GDP growth in these nations will be on par with oil GDP in the coming year, contributing further to Saudi Arabian economic growth.

UAE and Qatar to Lead Economic Growth Alongside Saudi Arabian Economic Growth

The UAE is predicted to be the fastest-growing economy in the GCC in 2025, with a growth forecast of 4.9%, up from 3.7% in 2024. Similarly, Qatar’s economic growth is projected to reach 2.7% in 2025, up from 2.1% this year. However, Saudi Arabian economic growth is expected to remain a key driver in the region's overall economic acceleration.

"The UAE is expected to be the star performer in the region’s economic growth in 2025. With OPEC+ planning to increase oil output, the UAE stands to gain significantly as it has had its base oil output quota raised twice but has yet to capitalize on it fully," said James Swanston, economist at Capital Economics.

"Both Qatar and the UAE are well-advanced in their diversification efforts, making them more prepared for a global market that is shifting toward peak oil demand. The UAE, particularly Dubai, has developed a strong non-oil economy supported by tourism and financial services, which helps cushion the impact of fluctuating oil prices."

Economic Outlook for Other GCC Nations and the Role of Saudi Arabian Economic Growth

Growth expectations for Bahrain, Kuwait, and Oman in 2025 are projected at 2.8%, 2.5%, and 2.8%, respectively. These figures represent improvements from their 2024 forecasts of 2.8%, -1.3%, and 1.6%. The increase in oil production is expected to drive these nations' economic performance in 2025, with Saudi Arabian economic growth continuing to be a benchmark for the region.

Despite oil’s dominant role, inflation across the GCC is predicted to remain stable. Median inflation forecasts range between 0.8% and 3.0% for both 2024 and 2025, reflecting a relatively subdued inflationary environment in the region.