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Led by Saudi Arabia and UAE, GCC poised to power global growth surge
The Gulf states are not just weathering global headwinds, but actively shaping a new future — one where capital, technology, policy reform and sustainability converge to deliver resilient growth
- PUBLISHED: Mon 19 Jan 2026, 10:30 AM
- By:
- Issac John
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As global leaders convene in Davos for the 56th World Economic Forum (WEF) Annual Meeting under the banner “A Spirit of Dialogue,” attention is sharply focused on how the world can unlock fresh sources of growth amid mounting economic headwinds, geopolitical uncertainty, and rapid technological change.
At the heart of many discussions, as global headwinds weigh heavily, is the role of the GCC countries — in particular, the UAE and Saudi Arabia — which are increasingly being seen as engines of global momentum through bold diversification, deep investment in AI and green energy, and resilient economic planning.
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According to the IMF’s October 2025 World Economic Outlook, global GDP is forecast to slow from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026. The fund warns that many advanced economies may grow barely above 1.5%, while emerging markets and developing economies struggle to keep output just above 4%. The World Bank strikes a similar chord: in its June 2025 Global Economic Prospects update, global growth is projected at just 2.3% for 2025 — a pace nearly half a percentage point slower than earlier expected the weakest outside full-blown recessions since 2008.
Against this subdued backdrop, the Gulf region’s contrast is striking. Recent estimates point to 2025 GDP growth of 4.8% for the UAE and 3.8% for Saudi Arabia, with forecasts into 2026 even stronger: for example, the Institute of Chartered Accountants in England and Wales (ICAEW) projects growth as high as 5.6% for the UAE. Non-oil sectors across the GCC are widely expected to expand by around 4.1%, with consumer spending rising and credit conditions improving.
Such figures stand in sharp contrast to sluggish growth across many developed economies. At a global level, slowing trade, rising debt, and inflation have dampened expectations — but Gulf economies are charting a different trajectory. For the UAE and Saudi Arabia especially, this represents not just recovery, but transformation.
One of the main drivers behind this shift is sweeping digital and technological modernisation. The World Bank highlights that all GCC countries now benefit from advanced telecom networks, with more than 90% 5G coverage, broad high-speed internet connectivity, and increasingly affordable access. Large investments in data centres and high-performance computing infrastructure have bolstered the region’s readiness for artificial intelligence (AI) — and both UAE and Saudi Arabia emerge as leaders regionally, and even globally, in adopting generative AI and other frontier technologies.
Academic research paints a similar picture. A 2025 comparative analysis of national AI strategies across the GCC notes that governments have favoured “soft regulation” frameworks that encourage rapid innovation and adoption, even as they emphasise ethical principles and long-term governance. This environment, while raising trade-offs around regulatory clarity and data privacy, is catalysing swift development in AI-driven public services, smart-city infrastructure, and private-sector digital transformation.
In parallel, both UAE and Saudi Arabia are doubling down on green energy and sustainability — another cornerstone of their economic diversification journeys. The UAE continues to expand solar capacity through major projects like the Mohammed bin Rashid Al Maktoum Solar Park, which has boosted its output target from 5,000MW to more than 7,260MW by 2030. Such investments are not only strategic but also symbolic, signalling a commitment to pivot away from fossil fuel dependency even as hydrocarbon revenue remains important.
And with the global race towards clean energy intensifying, the UAE’s early lead in renewables and energy transition offers it a strategic edge. But beyond energy and tech, non-oil sectors in both countries are flourishing. For the UAE, growth is being driven by tourism, trade, logistics, real estate and financial services.
In Saudi Arabia, the non-oil economy is picking up momentum as well — recent reforms around foreign ownership, industrial expansion, and liberalised investment frameworks under the landmark Vision 2030 plan are helping diversify the industrial base, attract foreign direct investment (FDI), and spur non-hydrocarbon exports by double digits in many segments.
At the WEF sessions in Davos, voices from the region are making a strong case: the Gulf states are not just weathering global headwinds, but actively shaping a new future — one where capital, technology, policy reform and sustainability converge to deliver resilient growth. As one senior regional policymaker reportedly put it during a private session: “What the world sees as vulnerability — oil dependency — we are turning into an opportunity through smart diversification, future-oriented investment, and structural transformation.”
This transformation is underpinned by public-private collaboration, a recurring theme across Davos agenda items. The forum’s 2026 agenda emphasises “unlocking new sources of growth”, “deploying innovation responsibly”, and “building prosperity within planetary boundaries.” GCC governments and private sector players alike seem to be taking these themes to heart — channelling petrodollar revenues into AI funds, sustainable energy, infrastructure upgrades and talent development.
Importantly, the region’s growing focus on human capital, education, and inclusion — especially in STEM fields — is increasingly cited as a strategic advantage. According to the World Bank report, women’s participation in STEM fields across the Gulf now exceeds the global average. As AI, clean energy and advanced manufacturing ramp up, the region’s demographic dividend — young, growing population with rising skills — is being redeployed to meet the demands of a rapidly evolving global economy.
Still, challenges remain. Oil-price volatility continues to pose macroeconomic risks. Environmental pressures — from climate change to water scarcity — add complexity to green-energy plans. And while digital infrastructure has advanced dramatically, long-term success depends on regulatory clarity, ethical AI governance, and sustained investment in human capital. As noted in academic assessments, GCC countries’ “soft-regulation” approach to AI may accelerate uptake today, but strengthening legal mechanisms, ensuring stakeholder engagement, and aligning local policies with international norms will be critical to avoid pitfalls around data governance and social trust.
In the global milieu of 2026 — where many economies are grappling with sluggish consumer demand, geopolitical fragmentation and inflationary pressures — the GCC seems to be offering a counter-narrative: one of agility, forward-looking reform, and sustained growth. The UAE and Saudi Arabia, in particular, seem primed to lead that narrative — not just for the Gulf, but for emerging markets globally.
At the WEF annual meeting, delegates from across the world will be watching closely. Will the Gulf region manage to turn its ambitious plans into lasting reality? If current signals are anything to go by — from lofty GDP forecasts to high-stakes AI and green energy commitments — the answer may well be yes. And if it does succeed, the ripple effects could reshape global growth patterns for decades to come.
WEF 2026: Unlocking new sources of growth
This year’s annual meeting in Davos will take place from January 19-23, 2026. At the World Economic Forum’s annual meeting, global leaders and policymakers will convene under the theme “A Spirit of Dialogue”, focusing on on how
the world can unlock fresh sources of growth amid mounting economic headwinds and geopolitical uncertainty.
