Revised Economic Growth Predictions for GCC Region due to Global Uncertainty by World Bank
Alright, let's dive into the latest economic news, yo! The Al-Shall Economic Center's weekly report has some concerning insights that line up with the International Monetary Fund's global economic outlook. The World Bank has raised the alarm about the increased uncertainty in our global economy, causing frequent revisions to economic growth forecasts.
In their report dated April 23, the World Bank adjusted the growth forecast for the six Gulf Cooperation Council (GCC) countries by 0.9% for 2025, and a slight 0.1% increase for 2026. The combined growth for the GCC in 2025 was revised down from 4.1% to 3.2%, while for 2026 it was raised from 4.4% to 4.5%.
Al-Shall's growth projections for 2025 and 2026 were adjusted downward for three of the six GCC countries. Saudi Arabia, the region's economic powerhouse, saw its growth estimates decreased by -2.2% and -0.3% for both years, bringing its expected growth to 2.8% in 2025 and 4.5% in 2026. Both Qatar and Kuwait had their growth projections lowered by -0.3% and -0.1%, respectively, with Qatar's growth forecast now at 2.4% for 2025 and 5.4% for 2026, and Kuwait expected at just 2.2% and 2.7% for the same years.
However, the story isn't all gloomy for every country. Bahrain's forecast for 2025 was marginally raised, but the 2026 projection was cut. The UAE, with a less oil-dependent economy, had its 2025 forecast increased, while its 2026 projection was raised even higher. Oman also experienced upward revisions in its growth forecasts for both 2025 and 2026.
The UAE is projected to have the highest growth rate for 2025 at 4.6%, while Kuwait remains at the bottom with a forecast of 2.2%. For 2026, Qatar leads with a projection of 5.4%, but Kuwait still lingers behind with 2.7%.
Al-Shall emphasized that Kuwait's share of the combined GDP of the GCC countries has plummeted from 11.0% in 2004 to an estimated 7.2% in 2025, according to IMF numbers. This steep decline in Kuwait's GDP share signals an issue with Kuwait's development model that requires some serious attention.
The report stressed that the economy of Kuwait experiences the most severe contractions during global downturns and the weakest growth during periods of expansion – unless the boom is solely oil-driven. Al-Shall insists that these observations are not mere opinions, but hard facts that indicate the need for Kuwait to adopt a more sustainable development approach. Delaying these reforms, Al-Shall warns, will have unbearable costs in the long run.
The factors behind Kuwait's economic woes are numerous: dependence on oil revenues, slow pace of diversification, global trade tensions, and the sluggish progress on structural reforms. Despite recent positive developments in Kuwait's non-oil private sector, the economy still struggles against the headwinds of global economic conditions and oil price volatility.
- The Al-Shall Economic Center's report indicates that the finance sector in Kuwait, a member of the Gulf Cooperation Council (GCC), is facing significant challenges, with downward revisions to its growth forecasts for both 2025 and 2026.
- The combined GDP share of Kuwait in the GCC dropped significantly from 11.0% in 2004 to an estimated 7.2% in 2025, according to IMF numbers, signaling a problem with Kuwait's development model that requires the attention of entities within the business sector and the government.
- The report highlights that the economy of Kuwait, specifically, experiences the most severe contractions during global downturns and the weakest growth during periods of expansion, unless the growth is solely oil-driven. Al-Shall asserts that these conclusions are not mere opinions but hard facts, emphasizing the need for Kuwait to adopt a more sustainable development approach to avoid long-term economic issues.
