GCC Economies Expected to Remain Resilient in 2026 Amid Strong Domestic Demand and AI Growth

Gulf Cooperation Council regional economies are expected to stay resilient in 2026, driven by strong domestic demand and a broadly steady global economy, according to an analysis. In its latest report, Oxford Economics highlighted that the real gross domestic product of the GCC region is projected to expand by 4.4 percent next year, up from an estimated 4 percent in 2025.

The projection aligns closely with the World Bank’s December outlook, which forecasts growth of 3.2 percent in 2025 and 4.5 percent in 2026. Earlier this month, the International Monetary Fund said GCC economic output is expected to accelerate to an average of 3.3 percent in 2025, up from 1.7 percent in 2024.

Oxford Economics noted that growth in the region has exceeded expectations this year after two years of underperformance. Non-energy sectors have maintained strong momentum, while rising oil production has provided additional support to the economies. The report added that the pause in OPEC+ oil production cuts is likely to continue into the second quarter of 2026, which could slightly slow oil-driven GDP contributions. However, GCC nations are expected to resume increasing oil output in the second half of the year, with full adjustments anticipated by mid-2027.

Economic diversification remains a priority for the region, with non-oil activities now accounting for 73.2 percent of GDP, up from 70.6 percent at the end of 2024. The GCC Statistical Center reported that combined GDP in the first half of 2025 reached $588.1 billion, up from $570.9 billion a year earlier, and forecasted growth to accelerate to 4.3 percent by 2027.

Consumer spending is expected to be a key driver of growth in 2026, supported by low inflation, high employment, and rising real disposable income. Oxford Economics said credit growth is likely to remain strong, aided by easier access to financial services and anticipated interest rate cuts by GCC central banks, which maintain currency pegs to the US dollar.

The report also highlighted the rising importance of artificial intelligence in regional development. GCC governments are aiming to create comprehensive ecosystems to attract AI investment and integrate the technology into local economies. Qatar is expected to be the top performer in the region, benefiting from expanded gas production and exports. Reports by PwC and KPMG show widespread adoption of AI among employees and businesses, with the Kingdom recognized as a leader in the Arab world for AI growth and technology governance.

Oxford Economics predicted that 2026 will be a pivotal year for AI, with increased investment in infrastructure, energy, data centers, and skilled workforce development. Policymakers are focused on creating pragmatic regulations to foster innovation and position the GCC as a global hub for emerging technology.