MEcon | June 2025 Edition

Saudi Arabia

Real GDP expanded by 3.4% in Q1 2025, with non-oil activities growing by 4.9%, which offset a 0.5% contraction in oil activities. Geopolitical tensions drove oil prices to USD 78/barrel in June, raising concerns about the Strait of Hormuz, as alternative routes could handle only about 15% of the daily crude shipped through the strait. Additionally, the Public Investment Fund (PIF) announced new domestic real estate ventures, including the Expo 2030 legacy development and strategic manufacturing partnerships with international investors.

United Arab Emirates

Inflation patterns diverged between emirates, with Dubai recording 2.4% monthly inflation while Abu Dhabi registered –0.1%, primarily driven by opposing movements in housing and transport costs. Abu Dhabi National Oil Company (ADNOC)’s USD 19 billion acquisition bid for Australia’s Santos marks a strategic expansion into LNG production, positioning the UAE alongside major global energy exporters. Moreover, non-oil trade is projected to reach the USD 1 trillion target by 2027, four years ahead of schedule, with non-oil sectors now comprising 75.5% of the national economy.

Qatar

The non-energy PMI showed modest growth in May 2025, although H1 performance presents the weakest period since 2020 due to subdued new orders and output growth. The government recorded its first quarterly budget deficit in three years during Q1 2025, with hydrocarbon revenues declining by 10% despite a 13% increase in non-hydrocarbon receipts. Additionally, tourism arrivals fell by 7% year-on-year to 1.5 million in Q1 2025 following the Asian Cup comparison period, with GCC nationals representing 36% of international visitors.

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