Urban evolution and AI boom: 5 economic themes to watch in GCC

The GCC is ready to navigate key economic shifts in 2025, PwC experts say

Looking at the overall picture in 2024 the global economy demonstrated moderate growth, with notable regional disparities. Within the GCC, continued investments in economic diversification, particularly across the tourism, real estate and manufacturing sectors, drove non-oil sector growth in 2024, reports PwC.

These gains helped offset the impact of OPEC+ oil production cuts, which significantly affected hydrocarbon output. As a result, non-oil GDP growth averaged 3.7%, outpacing the overall economic growth rate of 1.8%.

These suggest that diversification efforts have been effective, as countries such as Saudi Arabia, one of the hardest hit by production cuts, saw its non-oil sector expand at a healthy pace of 3.5% despite modest overall GDP growth of just 1.5%.

In 2025, the GCC is expected to remain economically resilient and effectively navigate the anticipated challenges of declining oil revenues and geopolitical fragmentation through five key themes which will define the year ahead:

1. Time for prudence: Balancing prudent fiscal management with strategic sovereign borrowing
2. Achieving tax harmony: Aligning with the OECD Pillar 2 framework
3. Building bridges: Navigating geoeconomic fragmentation with trade openness and strategic alliances
4. Urban evolution: Advancing urban developments to position the GCC as a leading talent hub
5. AI infrastructure boom: Leading in AI with major infrastructure investments and global partnerships

Despite fiscal challenges and heightened geoeconomic fragmentation, the GCC’s adaptability, global alliances and financial firepower means that it is well-positioned to navigate the complexities that 2025 will bring, concludes PwC.

Continued investments in the non-oil sectors, adoption of global tax frameworks, advancements in AI and urban development highlight the region’s commitment to building a globally-competitive, future-ready economy.