WASHINGTON – Economic growth across the Gulf Cooperation Council (GCC) is gaining momentum in 2025, supported by structural reforms and rapid digital innovation. According to the latest edition of the Gulf Economic Update (GEU)- Fall 2025, the United Arab Emirates (UAE) is expected to expand by 4.8%, Saudi Arabia by 3.8%, Bahrain by 3.5%, Oman by 3.1%, Qatar by 2.8%, and Kuwait by 2.7%. Sustaining this trajectory will require continued progress on national Vision strategies and disciplined fiscal management to mitigate risks from oil price fluctuations, geopolitical tensions, and potential reform slowdowns.
The report, titled “The Gulf’s Digital Transformation: A Powerful Engine for Economic Diversification,” focuses on three critical areas: economic diversification, macroeconomic stability, and digital transformation, while navigating global uncertainty and oil market volatility. The report takes stock of a decade of diversification efforts across the GCC, showing moderate advancement over the past decade, although most recent trends are promising. Hydrocarbons still dominate fiscal positions, making their role persistently central in influencing economic plans and development strategies. Non-oil exports remain modest with chemicals dominating non-oil exports. The transition away from oil dependence remains a work in progress.
The report highlights the Gulf’s rapid digital transformation and accelerating adoption of Artificial Intelligence (AI). All GCC countries now boast advanced telecom networks, with 5G coverage exceeding 90%, high-speed internet, and affordable connectivity. Significant investments in data centers and high-performance computing systems are driving AI readiness, with Saudi Arabia and the United Arab Emirates emerging as regional and even global leaders. Their progress is supported by vibrant startup ecosystems, strong venture funding, and government integration of generative AI applications.
“Diversification and digital transformation are no longer optional. They are essential for long-term stability and prosperity. Strategic investments in non-oil sectors and innovation will be critical to sustaining growth and stability,” said Safaa El Tayeb El Kogali, World Bank Division Director for the Gulf Cooperation Council. “The GCC’s digital leap is remarkable. With robust infrastructure and growing compute power, skills and competencies in Artificial intelligence (AI) capabilities, the region is well-placed to lead in innovation, provided we address labor and environmental challenges proactively.”
Women’s participation in STEM fields surpasses the global average, further reinforcing the region’s digital competitiveness. To maximize the benefits of diversification and digital transformation, the GEU recommends supporting small and medium-sized enterprises (SMEs) in adopting AI, strengthening innovation ecosystems, implementing reskilling programs to mitigate labor market disruptions Regional cooperation on digital infrastructure and the establishment of AI centers of excellence will be critical to building a unified digital market and advancing transformation across the Middle East, North Africa, Afghanistan, and Pakistan (MENAAP) region.
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