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To reverse a years of weakening total factor performance, local labour market policy is shifting from simple job development to handling active labor force transitions. Federal governments and companies are scaling short, modular training programmes and micro-credentials in information analytics and digital operations to gear up workers for emerging roles. Workplace-based learning and apprenticeship-style pathways are becoming more typical as companies integrate AI tools into daily workflows.
With oil rates forecasted to average $55-60 per barrel in 2026, local federal governments are heightening their focus on expenditure discipline and private capital mobilisation. Fiscal policy is rotating towards the monetisation of state-owned assets in logistics, energies, and desalination to reroute funds towards higher-impact financial investments. While borrowing via sukuk and sustainability-linked bonds is expected to increase to fund tactical deficits, the focus stays on strengthening non-oil revenue frameworks.
PwC Middle East financial policy and strategy partner Jing Teow said: "Having currently mobilised capital and policy at scale, GCC federal governments are now concentrated on shipment. In 2026, the top priority is reinforcing economic strength through more secure trade and investment relationships, reliable AI implementation, managed labor force transitions and disciplined fiscal policy in a more difficult and fragmented global environment.".
Saudi Arabia and UAE are poised to lead the Gulf region's economic expansion in 2026, supported by strong private-sector performance, resilient domestic demand and restored financial investment momentum, according to the current ICAEW Economic Insight Q4 2025 report, produced by Oxford Economics. The GCC is expected to exceed most global regions peers next year, with local GDP forecast to grow by 4.4%. Throughout the GCC, non-energy activity is projected to broaden by 4.1% in 2026, driven by strong labour markets, enhancing credit conditions and increasing financial investment in technology and AI-related facilities.
Although oil earnings will be under pressure in the first half of 2026, production is expected to increase again in the second half of 2026, supporting the region's medium-term outlook, it specified. Saudi Arabia will remain a significant factor to GCC momentum, with GDP forecast to grow 4.3% in 2026.
Development will be supported by commercial expansion and policy reforms, including reduced foreign ownership guidelines that aim to promote further investment. The financial deficit is predicted to widen to 5.6% of GDP next year amid softer oil costs, while the current five-year lease freeze in Riyadh aims to ease inflationary pressures, though it might constrain future real estate supply.
Strong domestic fundamentalsThe UAE is likewise placed for another strong year of efficiency, with GDP forecast to increase 5.6% in 2026 as non-oil sectors continue to broaden. Tourist, trade and financial services remain essential growth chauffeurs, supported by population development and sustained domestic need. Dubai's economy grew 4.4% in the first half of 2025, reflecting broad-based non-oil strength.
Oil production is anticipated to choose up once again in the second half of 2026, matching continuous financial investment in facilities, technology and international trade collaborations. Hanadi Khalife, the Head of Middle East, ICAEW, stated: "This quarter's outlook reinforces how far the GCC has actually been available in building varied, resilient and worldwide competitive economies.
Scott Livermore, ICAEW Economic Consultant, and Chief Financial Expert and Managing Director, Oxford Economics Middle East, stated: "Saudi Arabia and the UAE are entering 2026 with strong structures. Saudi non-oil activity is getting speed, supported by robust demand and rising investment, even as fiscal pressures increase.""The UAE continues to gain from strong domestic fundamentals, a sharp uplift in federal government costs and continual diversity efforts.
7 Steps to Developing Your Brand in Emerging Saudi CitiesWhat differentiates 2026 from preceding years is not merely the velocity of technological modification, though that acceleration is genuine, however rather a basic shift in how business develop of their GCCs' purpose. The is anticipated to grow to 4 hundred thirteen billion dollars by 2040, but this development masks a more profound improvement.
Rather, they ask whether these centers drive development, own profit-and-loss obligation, and contribute to competitive distinction. In 2026, the most successful GCCs will act like internal start-ups, agile, cross-functional, insight-driven, and deeply aligned with worldwide organization results. This shift from execution to ownership represents perhaps the single most substantial tactical recalibration in the GCC design's evolution.
This week, we're convening more than 3000 conferences between financiers and 119 Gulf-listed business with a combined value of $2.4 trillion at the HSBC GCC Exchanges Conference 2026, in London. We're uniting financiers, companies, exchanges, and policymakers to discuss what is altering in the region, and what follows, consisting of the expansion and ongoing advancement of the Gulf's capital markets, and the region's growing function in international networks of capital and trade.
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