THE GCC is poised for a significant economic acceleration in 2026, driven by a strategic pivot in oil production and robust non-oil activity, according to a new report by Emirates NBD.
Despite a softer outlook for global oil prices, the bloc is expected to see its fastest hydrocarbons expansion since the post-pandemic surge of 2022.
Daniel Richards, senior economist at Emirates NBD, noted that almost all six member nations are set to experience faster expansion compared to 2025 estimates.
The regional hydrocarbons sector – which still accounts for nearly 30 per cent of the GCC economy – is forecast to expand by 6.5pc next year, up from an estimated 4.5pc in 2025.
This growth is attributed to a shift in strategy by Opec+ to prioritise market share over pricing. Saudi Arabia is expected to see its oil GDP jump by 8pc, while Kuwait is projected to reach 6pc.
Closer to home, the report highlighted that while Bahrain is not an Opec+ member, the kingdom’s economy is expected to benefit from the Bapco Modernisation Programme (BMP), which was introduced in late 2024 and is now anticipated to significantly boost national industrial activity.
While non-oil growth may see a “modest slowdown” to a weighted average of 4.4pc (down from 4.8pc in 2025), economists view this as a natural stabilisation following years of high-speed recovery.
“The conditions that have supported growth through the past year are set to continue,” Mr Richards said, pointing to: Growing regional populations, the expansion of new industries, high levels of public investment and aggressive economic reforms.
In a boost for consumers and businesses, inflation across the GCC is forecast to remain soft at a weighted average of 1.8pc.
Recent PMI surveys show that businesses are raising prices at a “sedate rate,” supported by falling housing costs in major hubs and lower global oil prices. Furthermore, the region is expected to benefit from easing monetary policy, with the US Federal Reserve projected to cut rates by 75bps in 2026 – a move likely to be mirrored by regional central banks due to currency pegs.
The report warned that lower oil prices – forecast to average $60 per barrel in 2026 compared to $68 this year – will maintain pressure on state budgets. The aggregate GCC budget deficit is forecast at 2.3pc of GDP.
However, the fiscal picture remains mixed across the bloc. While Saudi Arabia’s deficit is expected to hover around 5pc, the UAE and Qatar are forecast to maintain surpluses. Oman is also expected to narrow its deficit through continued fiscal consolidation measures.
avinash@gdnmedia.bh
&uuid=(email))