World Bank forecasts 10.3% growth for Gulf economies in 2027

The World Bank has forecast a strong economic rebound for Gulf economies in 2027, with growth projected at 10.3% if the Iran conflict de-escalates and oil production and shipping return to normal. The organization's outlook assumes that trade, tourism, and domestic activity will recover following disruptions caused by the US-led war. However, the Gulf Cooperation Council economies are expected to contract by 4.3% in 2026 due to the ongoing conflict, which has significantly impacted the Strait of Hormuz.

Output across the Middle East, North Africa, Afghanistan, and Pakistan is also projected to decline by 2.1% in 2026, following growth of 3.3% in 2025. The World Bank noted that if the conflict subsides by the end of 2026, growth in the MENAAP region, excluding Iran, could rebound to 7.8% in 2027, driven by the recovery of hydrocarbon production and exports. The report emphasized that sustained policy efforts will be crucial for a regional recovery.

Saudi Arabia's economy is forecast to contract by 2% in 2026 before rebounding by 7.9% in 2027. The Kingdom has been partly shielded from the impact of oil export disruptions thanks to the East, West Pipeline, which carries crude to Yanbu on the Red Sea. Thomas Kuruvilla, managing partner of Arthur D. Little Middle East and India, highlighted that Saudi Arabia is entering the rebound with a broader economic base than in previous oil cycles, with sectors like construction, logistics, business services, tourism, and hospitality set to benefit.

Kuruvilla also predicted substantial gains for the Kingdom's tourism sector in 2027, noting that the nation has built a strong pipeline across hospitality, entertainment, and destination development. The World Bank report projected varying growth rates for other Gulf economies in 2027, including 26.7% for Qatar, 22% for Kuwait, 9.5% for the UAE, 4.2% for Bahrain, and 3.4% for Oman. Kuruvilla stressed that greater regional stability and economic recovery could boost investor confidence across the region.