Finance News on October 23rd (Editor: Zhou Ziyi) According to a survey conducted by a media outlet of economists, Saudi Arabia's economic growth is expected to accelerate after two years of moderate performance due to an increase in oil production. These economists also predict that the economic growth of other Gulf Cooperation Council (GCC) member countries will be strong.

Since the end of 2022, the Organization of the Petroleum Exporting Countries and its allies led by Russia (OPEC+) have been restricting oil production, but are expected to lift the restrictions in December this year, which may increase the income of the six GCC member countries.

Through a survey of 21 economists, the average growth rate of the six GCC countries next year is expected to be 4.1%, higher than the 3.7% in the July survey and higher than the expected growth rate of 1.8% in 2024.

The survey report predicts that Saudi Arabia's economy will grow by 4.4% in 2025, the fastest growth rate in three years, higher than this year's expected rate of 1.3%; the UAE's economic growth rate next year is expected to rise from 3.7% in 2024 to 4.9%, becoming the fastest-growing country in the region; Qatar's economic growth rate is expected to accelerate from 2.1% to 2.7%.

For other GCC countries, the surveyed economists expect Bahrain, Kuwait, and Oman to have growth expectations of 2.8%, 2.5%, and 2.8% respectively next year, while their growth expectations for 2024 are 2.8%, -1.3%, and 1.6%.

Earlier, a World Bank forecast showed that Saudi Arabia's gross domestic product (GDP) is expected to grow by 1.6% this year and will increase to 4.9% in 2025; while the International Monetary Fund recently estimated that Saudi Arabia's GDP growth rate in 2025 will reach 4.7%; and S&P Global's report predicts that Saudi Arabia's GDP growth rate in 2025 will be 5.3%.

Note: The World Bank expects the GDP growth rates of the six Gulf countries in the next two years.

Some market participants are concerned that although crude oil production will increase, the oil price is showing signs of weakness. A previous survey indicated that next year, the price of crude oil is expected to remain relatively weak, with an average price around $76.75 per barrel, slightly higher than the current $74.8 per barrel.

However, after weighing these two factors, Ralf Wiegert, the Middle East and North Africa economic director at s&p global market intelligence, reassured, "We expect the impact of low oil prices and high production to largely offset each other. As growth focuses on production, the actual GDP growth in 2025 will still benefit and accelerate compared to 2024."

Economy expected to grow strongly.

According to previous reports, Saudi Arabia, the world's largest crude oil exporter, is preparing to abandon the unofficial target of $100 per barrel, which will allow Saudi Arabia to reverse past production cuts and increase market share. In addition, coupled with the growth of non-oil income, it will help drive faster economic growth.

Moreover, major Gulf economies such as Saudi Arabia, the UAE, and Qatar have been exploring diversified pathways away from reliance on oil as their main source of income. Many economists predict that the growth rate of non-oil GDP next year will be roughly equivalent to the growth rate of oil GDP.

Regarding this latest survey, James Swanston, a macroeconomist at Capital Economics, said, "In terms of economic growth in 2025, the UAE's economy will be a highlight. If OPEC+ is ready to increase production, the UAE will benefit more as the country has already twice raised its basic oil production quota."

Swanston added, "Qatar and the UAE have made further progress in diversification efforts and are in a more favorable position as world oil demand approaches its peak. In particular, the UAE has a larger non-oil economy, for example, Dubai, which can sustain tourism and financial services, rather than relying too much on oil."

Wiegert of s&p global market intelligence believes that despite the good development of non-oil economy, oil remains the mainstay of the Gulf economies. He pointed out, "Oil revenue will still play a key role in these three economies. In the long term, non-oil revenue cannot replace oil revenue."