Gulf economies head into 2026 with a broadly stable backdrop as Saudi Arabia’s recovery gathers pace and financing conditions ease, according to Moody’s Ratings’ Global Macro Outlook 2026-27.
The agency describes the global picture as mixed. It expects world real GDP growth to hover between 2.5 per cent and 2.6 per cent in 2026 and 2027, easing from 2.6 per cent in 2025 and 2.9 per cent in 2024.
Emerging markets are forecast to expand by about 4.0 per cent helped by firmer 2026 growth in the US and China, while advanced economies are seen growing around 1.5 per cent a year over the next two years.
Moody’s says the US economy has proved resilient but is slowing with soft hiring and income growth that fit a late-cycle phase. The labour market is cooling, yet robust consumer spending and heavy investment in artificial intelligence have supported output, prompting upward revisions to US growth in 2025 and 2026.
That backdrop is significant for the GCC, where dollar pegs transmit US rate moves into local funding costs.
Risks remain elevated. Moody’s flags geopolitical tensions, the potential for trade and market disruptions and political instability that are amplifying uncertainty.
Diverging monetary policies and fragile bond markets that are prone to bouts of sharp volatility could add to financial turbulence. Rapid technological advances promise productivity gains and structural change across industries even as they render some sectors and jobs obsolete.
For the Middle East and North Africa, the outlook is anchored by Saudi Arabia. Moody’s expects the kingdom to continue recovering from the 2024 oil output cuts as production increases through the forecast horizon.
The Vision 2030 programme is advancing and is supporting medium-term prospects. Domestic services including tourism, leisure, and entertainment have benefited most so far.
Further progress in diversification will gradually strengthen resilience to oil price cycles, which is positive for regional supply chains and cross-border investment.
Moody’s adds that steady global growth near 2.5 per cent and a softer rate environment should help financing conditions across the Gulf. Trade re-routing and new partnerships outside the US-China axis are likely to continue, offering MENA producers and logistics hubs opportunities to deepen links with Europe, South Asia, and Africa.
Overall, the agency sees the GCC entering 2026 from a position of relative strength, led by Saudi momentum and supported by easier dollar funding, while remaining exposed to external shocks and the need to sustain non-oil reforms.
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