The GCC is set to outperform the global economy in 2026, with GDP growth projected at 4.4 per cent, according to the latest Institute of Chartered Accountants in England and Wales (ICAEW) Economic Insight Q4 2025 report, produced by Oxford Economics.
This robust expansion, though slightly downgraded from previous estimates, is significantly higher than the revised global growth forecast of 2.7pc for the same year.
The resilience of the GCC economy is primarily attributed to its thriving non-energy sectors, which are expected to accelerate their pace of expansion to 4.1pc in 2026, up from 4pc this year, driven by strong labour markets, improving credit conditions and rising investment in technology and AI-related infrastructure.
Saudi Arabia is a standout performer, with non-oil GDP growth expected to jump from 4.6pc to 5pc, propelled by continuous large-scale funding for diversification efforts.
The country’s PMI index recently surpassed 60, its second strongest reading in over a decade, signalling a robust end to 2025. Furthermore, GCC consumers will remain a key driver, supported by low inflation, falling interest rates, and expanding credit, with consumer spending across the bloc forecast to expand by an average of 3.5pc annually over the next two years.
Overall GCC growth has been slightly revised downwards by 0.2 percentage points for 2026, largely reflecting the Opec+ pledge to halt oil output hikes through the first half of the year. Due to this pause, the GCC’s oil sectors are now projected to expand by 5.1pc in 2026, maintaining the same pace as 2025.
For Saudi Arabia specifically, the production pause has led to a lower forecast of 10.2 million barrels per day (bpd), revising its oil sector growth down to 4.5pc for the year, from a previous 6.7pc estimate. Meanwhile, the Brent oil price is projected to average $63.6 per barrel in 2026, down from an estimated $69.3 this year, as the oil market faces an impending surplus.
Hanadi Khalife, head of Middle East at ICAEW, said: “This quarter’s outlook reinforces how far the GCC has come in building diverse, resilient and globally competitive economies. With Saudi Arabia and the UAE driving momentum through non-oil expansion, investment in technology, and long-term development planning, the region is well positioned to navigate global uncertainties and continue shaping its role as an economic leader. The progress we are seeing reflects an economic transformation that is strategic, sustained and delivering real impact.”
Beyond the oil and non-oil sectors, new drivers are emerging across the GCC. The travel and tourism sector continues to grow despite lingering geopolitical concerns, and the launch of the long-planned GCC unified visa in 2026 is expected to further boost arrivals, solidifying the region’s position as a global destination.
Additionally, in technology and AI, GCC governments are aggressively pursuing large-scale investments in AI infrastructure – including networks, data centres, and education – aiming for global leadership through early adoption and prioritising technological advances in trade negotiations.
The GCC remains on a favourable monetary path, with most central banks following the US Federal Reserve’s 25-basis point rate cut in October due to their US dollar currency pegs. This global monetary easing is expected to support investment and consumer spending, providing a boost to regional domestic demand.
The aggregate GCC inflation forecast has been cut to 1.9pc for 2025 and a moderate 2.5pc for 2026. The broader Middle East is also set for stronger growth, with the regional GDP now expected to expand by 3.7pc in 2026, up from 3pc this year.
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