As GCC governments intensify efforts to diversify their economies away from oil and gas, household spending in the region is set to outpace that of advanced economies, creating a landscape for consumer-facing investments.
This trend forms a critical pillar of the GCC’s emergence as the next major destination for growth, complementing unprecedented infrastructure spending and burgeoning new sectors.
According to Oxford Economics, real household consumption across the GCC is projected to increase by 3.4 per cent per annum over the next five years, nearly double the 1.7pc growth forecast for advanced economies.
Azad Zangana, head of GCC Economic Analysis at Oxford Economics, told Arab News that “the strong and rising contribution from households is likely to attract more inward foreign direct investment that will seek to meet the growing demand from consumers.”
Among the largest economies, Saudi Arabia’s real household consumption grew by 2.7pc in 2024 and is forecast to rise to 3.8pc by 2026, while the UAE, Kuwait and Qatar are expected to average annual growth of more than 3.5pc in the coming years.
Economist Talat Hafiz said that this growth in household spending is expected to create expanded business opportunities for both local and international companies across a wide range of consumer-focused sectors, supporting disposable incomes and strengthening purchasing power.
This strong consumer outlook is underpinned by several favourable cyclical factors. Notably, inflation in the GCC has remained and is expected to stay relatively low and stable.
While US and advanced economy inflation peaked at 8pc and 7pc, respectively, in 2022, rates in the UAE and Saudi Arabia reached only 4.8pc and 3.1pc, respectively.
Oxford Economics forecasts that inflation will pick up slightly in 2026 in some states before moderating again, helping to safeguard household purchasing power and provide certainty for business planning.
Unemployment rates in the GCC have generally been falling post-pandemic and are projected to continue declining, in contrast to expectations of rising unemployment in the US.
Crucially, employment growth in the GCC is forecast to be almost 10 times higher than in non-GCC advanced economies between now and 2030, providing a fundamental driver for aggregate consumption.
Zangana emphasised that the GCC’s youthful population is a significantly underappreciated asset for investors.
“Having older and aging populations should be seen as a significant risk to any long-term investment,” he said, noting that the GCC’s demographic profile avoids issues such as higher tax burdens and constrained government spending common in aging societies.
A significant structural shift is also underway through the expansion of credit. GCC governments are relaxing lending rules, partly by extending access to non-nationals, fuelling a sustained uptrend in credit growth.
Personal bank loans in the UAE surged 17.8pc year on year in the three months to April 2025, while Saudi Arabia has seen a recovery in personal lending activity.
This credit expansion is closely tied to a booming housing market, particularly in the UAE, where real estate-related loans grew 3.5pc in 2024, driven by a 42.5pc annual increase in transactions in Dubai.
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