‘Five pillars to shape the economic future of GCC in 2026’

PwC has released a comprehensive economic report outlining five key pillars expected to shape the trajectory of Gulf Cooperation Council (GCC) economies in 2026, signaling a decisive shift toward resilience, diversification and long-term competitiveness.

The report states that Gulf economic policies are moving firmly toward strengthening resilience through trade, investment and supply chains, accelerating the adoption of modern technologies, enhancing workforce readiness and reinforcing financial stability in response to intensifying global challenges.

PwC described 2026 as a pivotal year for fiscal rebalancing across the GCC, as governments adjust policies to lower oil and gas revenues. The focus will be on reprioritizing spending, monetizing assets, managing liabilities and boosting non-oil income streams. Priority will be given to projects with strong economic impact, particularly in digital infrastructure, logistics and industrial development.

Non-Oil Revenues and Kuwait’s Outlook

With specific reference to Kuwait, the report highlighted planned financial developments as Gulf states move forward in diversifying revenue sources. PwC noted that Kuwait and the UAE, following the introduction of additional local minimum taxes, are expected to achieve more stable non-oil revenues.

This reflects Kuwait’s commitment to aligning its tax framework with international standards, strengthening public revenues and reducing reliance on oil.

Productivity and the AI Opportunity

The report warned that productivity growth across the GCC has declined over the past decade, as measured by Total Factor Productivity (TFP), which reflects gains from technology, management practices and workforce skills.

This decline contrasts with continued improvements in developed economies and is attributed to slow technology adoption, limited process innovation and skills gaps in high-growth sectors.

PwC stressed that the scale of the AI-driven transformation presents a major opportunity to reverse this trend. Through widespread adoption of artificial intelligence, the region can boost real gains and drive productivity growth.

The report noted that Kuwait’s average annual change in TFP between 2015 and 2025 stood at -3.6 percent, the second-highest decline in the GCC after Qatar at -5.4 percent.

PwC said the Gulf states will work to build broader and more diversified trade bridges to counter geopolitical instability.

The report predicted progress in concluding free trade agreements with strategic partners including the United Kingdom, China and the European Union.

It also underscored the importance of securing access to supply chains for critical minerals to support diversification plans, particularly in advanced manufacturing.

On the technology front, PwC described 2026 as the year of “turning AI ambitions into reality,” as the focus shifts from building digital infrastructure to deploying AI across vital sectors.

The report stressed that this transformation will require active management of workforce transitions through reskilling and upskilling to prepare human capital for an AI-powered economy.

Debt, Financing and Capital Projects

The report noted that the ratio of government debt to GDP in GCC countries remains well below that of advanced economies. However, borrowing is expected to rise, including through sukuk and sustainability-linked bonds, to finance deficits and support strategic investments. Recent credit rating upgrades for Saudi Arabia, Oman and Kuwait are expected to improve access to capital markets.

Public-private partnerships will continue to play a central role in implementing capital projects, helping to ease pressure on government budgets. According to PwC figures, Kuwait’s public debt is forecast to rise from 7 percent of GDP in 2025 to 11 percent this year, remaining the lowest level among GCC states.

Deepening Integration

PwC concluded that the GCC is entering 2026 with a clear agenda to deepen global economic integration, lay the foundations for new industries and enhance resilience in an increasingly uncertain global environment. Progress in trade, technology, supply chains, workforce transformation and fiscal policy reflects a region positioning itself for long-term competitiveness rather than short-term adjustments.

The report emphasized that the ability of governments and businesses to implement these priorities — by mobilizing capital, accelerating capacity building and maintaining reform momentum — will determine how effectively current opportunities are converted into sustainable economic gains.