A new report by PwC Middle East finds that the Gulf Cooperation Council (GCC) is entering a new era of outward-looking growth, driven by a strategic expansion of its trade agenda and deeper global integration. Despite challenges from lower oil prices, the region’s economies are showcasing agility by accelerating diversification and pursuing investment-led growth.
Fiscal Headwinds Test Regional Resilience
While OPEC+ has increased oil production, a corresponding drop in Brent crude prices to US$60 per barrel is creating fiscal pressure across the region. The IMF projects fiscal deficits for Saudi Arabia and Bahrain in 2026, though the UAE is expected to maintain a surplus. In response, governments are demonstrating fiscal discipline by tightening short-term spending while preserving crucial long-term investments.
Richard Boxshall, Partner and Chief Economist at PwC Middle East, stated, “Fiscal resilience today means adaptability. Lower oil prices are testing buffers and reinforcing the region’s commitment to reform. The imperative remains clear: governments in the region must channel investment into non-oil sectors, private enterprise, and trade partnerships, to sustain the transition to a balanced growth model.”
Non-Oil Sectors Emerge As Growth Engine
The non-oil economy has become the primary driver of regional momentum, fueled by strong domestic demand and low inflation. In the first half of 2025, Abu Dhabi’s non-oil sector expanded by 6.4%, followed by Qatar at 5.3% and Saudi Arabia at 4.2%.
This robust performance is powered by key sectors including tourism, logistics, manufacturing, and digital infrastructure, with a notable focus on AI and data centres. The expansion of financial and professional services is also strengthening the GCC’s economic foundation, leading the IMF to forecast a regional real GDP growth of 3.9% in 2025 and 4.4% in 2026.
An Expanding Global Trade Agenda
The GCC is actively diversifying its global partnerships through a growing network of Comprehensive Economic Partnership Agreements (CEPAs) and Free Trade Agreements (FTAs). Recent milestones include new CEPAs with Australia and Malaysia, with ongoing negotiations with the UK, Pakistan, Indonesia, and Japan.
This strategy pivots towards Asia and Africa, which now anchor the GCC’s trade agenda. In 2023 alone, GCC investment in Africa surpassed US$53 billion. This shift positions the region not just as an energy supplier, but as a competitive and unified hub for global commerce.
“The GCC’s trade strategy reflects a region taking control of its economic future,” said Stephen Anderson, Chief Strategy & Technology Officer at PwC Middle East. “By forging new trade partnerships and opening new markets across Asia and Africa, the GCC is redefining its role from a traditional energy supplier to a key player shaping the next phase of global trade and investment.”
Anderson added, “The real opportunity now lies in turning ambition into impact. That means moving beyond signing deals to delivery, by accelerating implementation, completing the customs union, and ensuring businesses can fully leverage the access and advantages these agreements create.”
About PwC Middle East
Established in the region for over 40 years, PwC Middle East employs over 10,000 people across 12 countries: Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, the Palestinian territories, Qatar, Saudi Arabia and the United Arab Emirates. As part of a global network of firms in 151 countries, PwC is committed to delivering quality in assurance, advisory and tax services.
Source: BizBahrain
