Macroeconomic & Market Outlook Report — October 2025

Report summary

Kuwait: After two consecutive years of recession, Kuwait is set for a modest recovery in 2025. Real GDP is projected to grow by 2.3%, supported by easing OPEC+ output cuts, non-oil infrastructure projects, and a rebound in oil GDP. Inflation remains among the lowest in the region at ~2.3%, while private-sector credit growth is accelerating. The fiscal deficit persists, projected near 13% of GDP in FY2025/26, though a new public-debt law enacted in March 2025 has enabled Kuwait to re-enter global markets. Recent issuances included US$11.25 billion in international bonds and KD 1.8 billion in domestic debt, providing liquidity while preserving sovereign wealth buffers. Despite progress, structural challenges remain, particularly high reliance on oil revenues, a dominant public wage bill, and slow diversification. Vision 2035 reforms and legal modernization efforts are underway, but implementation will be key. GCC: The GCC economies are poised for stronger growth in 2025, with the World Bank projecting aggregate expansion of 3.2%, up from only 1% in 2024. Saudi Arabia, the UAE, Qatar, Oman, and Bahrain are all expected to accelerate as oil production rises and non-oil activity remains resilient. Inflation remains low across the bloc, generally in the 1-2% range, thanks to strong U.S. dollar pegs and subsidies. Fiscal positions diverge: Bahrain carries the highest debt burden (127% of GDP), while the UAE and Qatar sustain surpluses with moderate debt ratios.