GCC Growth Set to Reach 4.4% in 2026

Gulf economies are set for stronger expansion in 2026, supported by resilient domestic demand, easing inflation, and improving credit conditions, according to new projections from Oxford Economics. The consultancy expects real GDP growth across the GCC to reach 4.4% next year, up from an estimated 4% in 2025, marking a firmer outlook after two years of underperformance.

Oxford Economics said non-energy sectors have continued to deliver solid momentum, while a gradual increase in oil production has provided additional support. Regional growth has shown early strength, with combined GDP reaching $588.1 billion in the first half of 2025, compared to $570.9 billion a year earlier. Non-oil activities accounted for 73.2% of GDP, up from 70.6% at the end of 2024, underscoring the region’s ongoing diversification push. Other global institutions broadly echo this outlook: the World Bank forecasts GCC growth of 3.2% in 2025 and 4.5% in 2026, while the International Monetary Fund projects 3.3% growth in 2025.

Oil remains a key variable in the outlook. Oxford Economics noted that OPEC+ recently paused the re-expansion of oil output as excess inventories rose above two million barrels per day. The firm expects Brent crude prices to fall below $60 per barrel in early 2026, likely prompting OPEC+ to extend the production pause into the second quarter. As a result, the contribution of oil extraction to GDP growth may stall temporarily, before supply increases resume in the second half of 2026 and remaining output caps are fully lifted by mid-2027.

Consumer activity is expected to be a central driver of growth next year, as low inflation and tight labour markets support real disposable incomes. The IMF projects average inflation across the GCC at 1.7% in 2025 and 2% in 2026, with headline inflation remaining below 2% in Bahrain, Oman and Qatar, close to 2% in Saudi Arabia and the UAE, and slightly above 2% in Kuwait. Credit growth is also expected to remain elevated as monetary conditions ease. With GCC currencies pegged to the US dollar, regional central banks are likely to follow the US Federal Reserve in lowering interest rates, reducing debt servicing costs and supporting household demand.

At a country level, Qatar is forecast to be the strongest performer in 2026, driven by planned increases in gas production and exports. Beyond energy, Oxford Economics highlighted the growing strategic role of artificial intelligence in national diversification plans. Governments across the GCC are investing in infrastructure, data centres, energy supply and skills development to attract global AI companies, with ambitions for the sector to become an export industry in its own right.

The report describes 2026 as a turning point, as long-term strategies move from planning into execution. Increased capital investment, wider AI adoption across the workforce, and more pragmatic regulatory frameworks are expected to shape the next phase of growth, positioning the GCC to sustain momentum beyond hydrocarbons.