UBS Sees Gulf Boom: Growth in Saudi & UAE Non-Oil Sectors Amid Oil Price Shift

UBS Investment Bank’s recent outlook suggests that the Gulf region—particularly Saudi Arabia and the UAE—is entering a phase of “significant growth”, underpinned by both hydrocarbon and non-hydrocarbon drivers. According to UBS’s analysis, Saudi Arabia is expected to grow approximately 3.5% in 2025, rising to around 4.0% in 2026, while the UAE is forecasted at 4.0% for 2025 and ~4.3% in 2026. These forecasts reflect upward revisions in response to faster than expected GDP recovery tied to renewed oil production from OPEC+ and strong performance in sectors outside of oil. [1]

UBS assumes Brent crude prices will average around US$65 per barrel in 2026, rising to US$70 in 2027 and US$75 in 2028. These projections hinge on demand rising modestly, supply growth from non-OPEC+ stalling, and potential disruptions or constraints in supply from sanctioned producers—while also incorporating downside risks including weaker global growth or renewed demand shocks. [1][2]

In the non-oil realm, UBS identifies banking, telecommunications, and IT as among the most attractive sectors in the Middle East and North Africa (MENA) region. Wealth creation is accelerating: UBS reports rising resident numbers of high-net-worth individuals (e.g. ~13,000 new dollar-millionaires in the UAE in 2024), inflows tied to property investment, and migration trends of affluent clients. These trends are expected to create deal flow in asset management, real estate, and advisory services. [3]

However, growth is not without constraints. Oil price volatility remains a wildcard, with UBS’s oil forecasts recently cut for 2025 and 2026 amid increasing supply from non-OPEC+ sources and resilient output from sanctioned countries. At the same time, demand growth is seen as modest, with international trade tensions and global economic headwinds potentially weighing. Fiscal pressures (deficits and oil revenue dependence) and geopolitical risks—both external (conflict, sanctions) and internal (reform implementation, policy shifts)—also chart headwinds. [2][1]

Strategically, the Gulf must continue accelerating diversification, ensure efficient infrastructure for sectors like digital and fintech, manage public debt and spending with discipline, and create regulatory certainty to attract international capital. From an investment banking perspective, opportunities lie in financing non-oil mega-projects, privatisations, debt and equity capital markets, wealth management, and cross-border transactions. Key risks to monitor include compliance with OPEC+ discipline, oil demand trend globally (especially in Asia), inflation and cost pressures, and political/geopolitical stability.

Open questions include: how far UAE, Saudi Arabia, and other Gulf states can reduce oil dependence given global energy transitions; whether the non-oil sector can continue to absorb labor, capital, and regulatory slack; how fiscal policy and monetary settings will adapt; and how oil prices behave relative to UBS’s forecast under revised supply-demand and geopolitical regimes.