The World Bank has lifted its growth forecast for the Gulf Council Cooperation (GCC) to 4.5% for 2026, supported by structural reforms and rapid digital innovation.
A WB forecast issued in October had projected 4.4% growth for 2026.
In its latest edition of the Gulf Economic Update (GEU), the World Bank said economic growth across the Gulf council is gaining momentum in 2025.
It said GCC countries are going through rapid structural transformation to diversify their economies away from oil, where jobs are at the heart of national vision.
The GCC countries are also in a unique position to attract and retain talent equipped with digital skills to build, operate and sustain the large digital infrastructure investments made in Digital Public Infrastructure, cloud computing, data centers and AI.
In Bahrain, the report said the country continues to show robust growth, driven primarily by its non-oil sectors, notably financial services and tourism.
Investments in infrastructure, gas, logistics, financial technology, and tourism are expected to sustain medium-term growth.
However, the report showed that fiscal pressures persist due to high deficits and elevated public debt while the economy is expected to expand by 3.5% in 2025.
Kuwait is emerging from two challenging years marked by regional instability, subdued oil prices, and OPEC+ production cuts, according to the WB report.
After consecutive GDP contractions in 2023 and 2024, the economy is showing signs of recovery, with positive growth expected in 2025 and beyond, supported by higher oil exports.
The recent passage of a financing and liquidity law enabling government debt issuance is a positive step toward easing fiscal pressures, the report said, adding that the economy is expected to expand by 2.7% in 2025.
Oman, the WB report said, has accelerated its diversification efforts, with non-hydrocarbon sectors increasingly driving growth.
The economy is expected to expand by 3.1% in 2025, with further acceleration anticipated in the medium term.
As for Qatar, it maintains a steady growth trajectory, underpinned by strong non-oil sector performance and robust external surpluses despite lower hydrocarbon prices.
As a global leader in liquified natural gas (LNG) production, Qatar is set to significantly boost output through the North Field expansion, reinforcing its position in global LNG markets.
Fiscal and current account surpluses are expected to remain strong, supported by LNG expansion as real GDP growth is projected to reach 2.8% in 2025.
Saudi Arabia is experiencing renewed economic momentum, with both oil and non-oil sectors contributing to growth. Real GDP growth is expected to reach 3.8% in 2025.
The report noted that fiscal pressures have intensified due to subdued oil prices, resulting in a widening deficit.
The country is leveraging its low debt levels to access global capital markets, with recent borrowing raising the debt-to-GDP ratio to close to 32%.
Ongoing reforms under Vision 2030 and changes in foreign ownership regulations are expected to further attract investment.
Also, the WB said, the UAE continues to sustain economic dynamism and diversification, with real GDP growth projected to reach 4.8% in 2025.
The Emirates stands out for its diversified economy, with balanced growth between non-oil and oil sectors, it said, adding that it is also leading in diversifying its export base.
Gulf and AI
The report showed that all GCC countries have robust telecom networks, with 5G coverage exceeding 90% and widespread fiber connections.
It said significant investments in data centers and high-performance computing (HPC) systems, especially in Saudi Arabia and UAE, underpin the region’s digital economy and AI readiness.
“Diversification and digital transformation are no longer optional. They are essential for long-term stability and prosperity. Strategic investments in non-oil sectors and innovation will be critical to sustaining growth and stability,” said Safaa El Tayeb El Kogali, World Bank Division Director for the Gulf Cooperation Council.
“The GCC’s digital leap is remarkable. With robust infrastructure and growing computer power, skills and competencies in Artificial intelligence (AI) capabilities, the region is well-placed to lead in innovation, provided we address labor and environmental challenges proactively,” she added.
The report also showed that women’s participation in the fields of Science, Technology, Engineering, and Mathematics (STEM) surpasses the global average, further reinforcing the region’s digital competitiveness.
