Video|9 January 2025

MENA | What’s Driving GCC and Israeli Economic Trends in 2025?

Scott Livermore

Chief Economist & Managing Director

GCC economies ended 2024 on a firm note according to December PMI surveys, with business activity rising especially strongly in the UAE. Solid PMI readings, higher government spending, wages outpacing inflation and monetary easing create favourable conditions for demand in the region this year. We see a broadly steady expansion across non-energy sectors with non-GDP in the GCC expanding by around 4% in 2025.

The Bank of Israel held its policy rate at 4.5% this week in the face of inflationary risks stemming from tax changes and supply-side constraints. The bank’s revised projections pin the inflation rate at 2.6% this year, in line with our estimate, and medium-term inflation expectations have eased within the central bank’s target range. We think monetary easing will be gradual this year and we see the first cut in Q2 at the earliest.

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