Gulf’s non-oil sectors set for a slowdown

Headline GDP growth in the Gulf economies will strengthen sharply in 2025 as oil output cuts are unwound. But lower oil prices will prompt a turn to fiscal consolidation in most of the Gulf, causing growth in non-oil sectors to slow. Elsewhere, balance sheets in economies outside the Gulf have improved and slowing inflation will allow central banks to loosen monetary policy. Fiscal tightening will still be needed to stop public debt ratios from rising, although this is unlikely to prevent a pick-up in growth next year. We still think that Tunisia is heading for a sovereign default.