A 5.8% growth rebound is setting up the Gulf’s 2027 economy

The Gulf economy is on track for a sharp rebound next year, with growth forecast at 5.8% as energy exports recover and non-oil sectors regain momentum, according to the latest outlook from the Institute of Chartered Accountants in England and Wales (ICAEW).

The rebound follows a projected 6.4% contraction in 2026, with Qatar, the UAE and Saudi Arabia all expected to return to growth in 2027 as energy production and broader economic activity recover.

Qatar is expected to post the fastest growth, followed by the UAE and Saudi Arabia.

The slowdown comes as the region has experienced significant disruptions at Red Sea ports and a slowdown in Saudi oil exports. The report projects that trade and energy flows will gradually recover through 2027, though they are expected to remain below pre-conflict levels for some time.

The report suggests that the energy sector will be an anchor for next year’s recovery across the Gulf. However, economists predict it may recover unevenly across the region.

ICAEW expects the GCC’s hydrocarbon sector to expand 25.9% next year, following a 26.9% contraction in 2026, as energy markets continue to stabilize.

Saudi Arabia’s economy is projected to return to 4.7% growth in 2027, following a 4.6% contraction this year, with the swing reflecting an expected gradual normalisation in the oil sector.

The UAE is set for a stronger rebound in 2027, with economists forecasting 6.6% economic growth, reversing a 1.5% contraction this year.

Qatar is projected to record the region’s fastest expansion at 11.5%, driven by its particular exposure to energy exports via the Strait of Hormuz.

The report notes that options for rerouting energy exports have narrowed in recent weeks, with Saudi Arabia’s own East-West pipeline, previously seen as a key workaround, alongside separate disruption to shipping through Red Sea ports.

Meanwhile, oil and gas prices have risen sharply in recent weeks in response to the disruption to Saudi oil exports.

Economists expect prices to remain elevated, with Brent oil staying above US$100 per barrel until early 2027, then slowly declining over 2027-28.

The tourism and non-energy sectors are expected to see a more gradual recovery.

The report expects non-oil sectors to grow as consumers benefit from improving confidence and easing price pressures, with a growth forecast of 3.3% after a 1.9% downturn this year.

Recent data points to signs of underlying resilience already. Saudi Arabia’s non-oil private sector expanded further in August, with the PMI reaching a six-month high of 53.8, while similar surveys in the UAE and Kuwait also pointed to continued non-oil recovery despite ongoing regional uncertainty.

Tourism remains among the sectors most exposed to the conflict. In the UAE, where the sector contributes around 13% of GDP, visitor numbers are projected to rebound by 30% in 2027 and a further 59% in 2028. A full recovery to pre-conflict levels is not expected before 2028.

“What stands out to us on the ground is how quickly businesses across the region have adjusted, rerouting supply chains, revisiting financing plans and rebuilding confidence even while conditions remain unsettled. That adaptability doesn’t always show up in a single quarter’s growth figure, but it’s exactly what will determine how well the region weathers what comes next,” said Hanadi Khalife, Regional Director MEASA, ICAEW.

Azad Zangana, Head of GCC Macroeconomic Analysis at Oxford Economics, added that “non-oil momentum is holding up, with PMI data and consumer confidence both performing better than the headline growth numbers suggest. That said, Saudi Arabia’s oil export infrastructure has taken a significant hit, and energy prices look set to stay elevated for longer, both of which push out the likely timeline for a fuller recovery. We now expect the Fed to hike again in December, with GCC rates following suit.”

Elsewhere in the region, the picture is varied. Jordan remains among the countries showing the most resilient economies, expected to grow 2.8% this year and 2.6% in 2027 despite regional headwinds. Syria’s economy continues to reintegrate into global trade, with growth expected to exceed 10% next year.