Oxford Economics forecasts average growth to rise to 2.7% from expected 0.3% this year
Gulf economies are forecast to see their fastest expansion in three years in 2018, according to analysts Oxford Economics.
It said in a new research note that after two difficult years including a tough 2017 where regional GDP growth is expected to come in at just 0.3 percent, the region is set to see 2.7 percent growth next year.
Oxford Economics, which recently opened its new Middle East office in Dubai, said Oman is set to lead the regional rebound, with forecast growth of 5 percent after a likely 2017 outcome of 0.2 percent.
The UAE is set to see its pace of growth almost double to 3.3 percent next year, while Qatar is projected to see its growth accelerate to 3.1 percent from a likely 1.3 percent for 2017.
The research note added that Bahrain is expected to match the likely 2017 pace of growth by again expanding by 1.8 percent while Saudi Arabia is likely to improve from a 0.3 percent decline this year to 2 percent growth.
The regional revival comes as crude oil prices have picked up slightly and austerity is easing but the GCC still faces significant headwinds, noted Oxford Economics.
It added that regional inflation will rise and the US dollar peg means that the region will have to raise interest rates in tandem with the US Federal Reserve, reinforcing a still-restrictive fiscal policy stance. Ongoing political uncertainty in the region generally may also unsettle domestic and global investors.
It also said that weak external and fiscal positions leave Bahrain and Oman exposed to further credit rating downgrades next year.