After decades of rapid economic development, the six countries of the Gulf Cooperation Council are adapting their business model to a changing global environment. While the conflict in the Middle East is the immediate catalyst, a range of forces are at play, including multipolar power dynamics and competition over trade, technology, and talent.
Both individually and collectively, the GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, or UAE) are embedding greater resilience into their economic plans and relationships, and this is necessitating deliberate shifts in how they do business, both in the region and with the rest of the world. These changes have important implications for companies and investors, as well as for other countries worldwide.
Outsized Impact
Five pillars have played big parts in the GCC countries’ economic growth model. These nations have a strong energy backbone and are major capital exporters. They are magnets for imports and migration, and they have positioned themselves as gateways for logistics and trade.
The numbers tell the story. While the GCC accounts for only around 2% of global GDP, it has been the source of about 27% of global crude oil exports and about 24% of global LNG exports. GCC countries import about 4% of global goods and provide some 20% of global air cargo capacity. They account for roughly $6 trillion of sovereign wealth fund assets under management, and their investments abroad account for 36% of all outbound capital deployment by sovereign wealth funds globally. The GCC is also one of the world’s most important expatriate labor markets, crossing all skill levels, with nonnationals representing more than 75% of the private-sector workforce in several economies.
This model has historically provided the GCC’s member countries with significant global leverage as they move energy, capital, people, goods, and strategic inputs across regions. But the same model also is also subject to economic vulnerabilities, including exposure to geographic chokepoints (highlighted in recent months by the mostly closed Strait of Hormuz) and concentrated supply chains, as well as heavy economic dependence on energy, external labor, and imported technology.
Throughout the GCC, each pillar of this growth model is now undergoing reassessment, if not realignment, from the perspective of strengthening resilience. (See Exhibit 1.) Significant pivots are taking shape. The changes will affect each country’s business and economic dealings with the rest of the world, and many will open new opportunities for global businesses and financial institutions.
Distributed Infrastructure
The concentration of critical infrastructure around the Gulf has long been a major strategic strength, but recent disruptions and regional tensions can be expected to accelerate investments in multiple sectors and industries, including a shift to distributed and networked facilities. The location of ports, oil and gas export facilities, and desalination plants will likely be rethought. More distributed and resilient design of transportation corridors, rail and road connections, ICT networks, and power and water interconnections will also be on the agenda. New projects will be evaluated not only on financial returns, but also on the basis of resilience, redundancy, and the ability to provide more options for users.
A likely priority, of course, will be the ability to reduce risk from the Strait of Hormuz chokepoint, since about 65% of the Gulf’s oil volume currently lacks a bypass. More than 75% of imports into GCC countries (except for Oman) traveled through the Strait before the crisis. Priorities are likely to include energy and transportation links across the Arabian Peninsula and into Europe, Africa, and India. Such projects could increase the resilience of existing infrastructure and reshape regional investment priorities and logistics flows over the coming decade.
In addition to the planned India–Middle East–Europe Corridor and the proposed Middle East–India Deepwater Pipeline, potential projects include expanded connections between Saudi Arabia’s east and west coasts, more links to hubs on the Indian Ocean, a regional rail network, and pipelines to circumvent the Strait of Hormuz. Bringing many of these projects to fruition would require enormous investments and could create opportunities for global businesses in related industries. (See Exhibit 2.)
Secure In-Region Supply Chains
Regional supply chain security, particularly for critical imported goods, is becoming a strategic priority across the GCC. The heavy dependence on concentrated import relationships for such products as semiconductors, pharmaceuticals, industrial machinery, food, and critical minerals exposes the region to geopolitical risk, supply disruption risk, and potential inflation. (See Exhibit 3.) Supply vulnerabilities for the GCC are significant in a wide range of sectors.
Trade agreements are becoming a key part of diversified sourcing strategies—though there are few in effect today—and approaches diverge over whether to prioritize bilateral or GCC-wide agreements. (See Exhibit 4.) Only three GCC-wide trade agreements are in place, one with a group of Arab League countries, another with Singapore, and a third with the European Free Trade Association countries (Iceland, Liechtenstein, Norway, and Switzerland). The GCC as a bloc recently signed an agreement with the UK, and more deals currently under discussion could progress, such as GCC–China and GCC–India agreements.
On a bilateral basis, the UAE has been active in recent years, and its new national supply chain program points to an intensification of such efforts. It has agreements with Turkey and multiple countries in the Asia-Pacific region, and additional agreements are in preparation, including with the EU. Bahrain and Oman have free-trade agreements with the US.
The localization agenda is also becoming more concrete, as recent developments in pharmaceuticals, chemicals, and defense manufacturing show. For example, Saudi Arabia has set ambitious targets for defense industry localization as part of its Vision 2030, and earlier in 2026 it launched a host of industrial programs in collaboration with defense companies. Likewise, Abu Dhabi has announced the establishment of the Al Selmiyyah Defense Industrial Free Zone to attract defense firms. LIFEPharma, the UAE's only US FDA-approved pharma manufacturer, is expanding into vaccines, oncology treatments, and advanced injectables in the Khalifa Economic Zones. Foreign direct investment will play an important role in building regional capacity. Since the COVID pandemic, three key sectors—food, health and biopharma, and aerospace and defense—have accounted for only 4% of all greenfield foreign direct investment in the region. Existing investment frameworks, incentives, and partnership models could evolve to reflect these new priorities.
Supply chain resilience is likely to become a defining feature of the GCC’s industrial agenda, creating opportunities for global suppliers across a wide range of industries.
Integrated Energy
The GCC’s role in global energy markets is evolving as geopolitical disruptions and new technologies such as AI, with their own substantial energy demands, reinforce the importance of resilience and energy security.
The region’s energy companies do not follow a single playbook, and most remain focused on monetizing their highly competitive local resources. At the same time, they are looking outward to strengthen existing customer relationships and find new ones, defend market position, and expand participation across geographies and the broader energy value chain. There are signs that many are moving from being primarily energy exporters to becoming more deeply integrated into global energy systems through overseas production, storage, downstream assets, LNG infrastructure, and trading.
To this end, regional energy players are considering accelerating investments in upstream assets globally. The goals are to secure supply at origin and develop alternative means to ensuring stable supply capabilities, and to form joint ventures and partnerships in order to lock in demand. They are also exploring increased production capacity to protect market share and fund reconstruction of conflict-damaged facilities.
They should find receptive partners. Recent disruptions have heightened energy security concerns among importing countries, leading to efforts to rebuild strategic stocks and expand storage capacity. This will create demand for storage terminals, capacity leasing, co-location partnerships, downstream investment, and long-term supply contracts.
GCC energy players are also using global investment vehicles and partnerships to diversify into chemicals and related downstream sectors. Together, these developments could create significant business opportunities for energy sector participants.
Rebalanced Investment
GCC sovereign wealth funds remain among the world’s most sought-after pools of capital. Of the roughly $6 trillion in assets under management at these funds, more than $3.5 trillion is invested abroad. GCC sovereign wealth funds invested around $120 billion in 2025 alone.
Deployment patterns could evolve, however, based on the sponsoring country’s need to rebuild, future proof, and strengthen home economies. In addition, competing fiscal priorities could mean that sovereign wealth funds receive smaller capital injections going forward.
This pivot is not a simple retreat from outbound investing. Rather, sovereign capital is likely to become more selective, balancing domestic resilience needs with strategic external investments and partnerships that provide technology, market access, industrial capability, or geopolitical positioning. Outbound investments are likely to be screened more closely against national strategic objectives.
The resilience of critical sectors such as defense, energy, infrastructure, food, and health care are set to receive greater attention. Capital movement following the onset of the conflict in the Middle East has involved investments in regional infrastructure alliances and domestic ecosystems, as well as selective outbound bets in health care, space, and technology. These provide early evidence of changing priorities. Given the global role played by GCC sovereign wealth funds, evolving dynamics could reshape investment flows on a sectoral and geographic level.
Future-Proofed Workforce
The GCC’s economic model has historically relied on expatriate labor at most skill levels across most sectors. Non-nationals account for more than 75% of private-sector employment in several GCC economies. This reliance has turned into a challenge for many GCC countries as recent disruptions have aggravated the already intense global competition for talent.
Countries are accelerating efforts in three areas to strengthen workforce resilience and reduce their vulnerability to expatriate flight. They are adopting a more deliberate workforce model: attracting and retaining highly skilled talent, especially those with high-tech skills; nationalizing the workforce in critical sectors and positions; and automating lower-skill tasks where possible.
Attracting highly skilled people will be a continuing challenge as competition for such talent in AI; science, technology, engineering and mathematics; advanced manufacturing; energy; defense; and frontier technologies is intensifying globally. The GCC’s global rankings for talent attraction are strong in some markets but uneven across the region, creating both an opportunity and a policy challenge.
At the same time, governments are focusing more on bringing their citizens into a range of sectors and roles, especially those deemed critical for public order. These include delivery of critical services, such as health care, and the functioning of the economy. A range of tools will likely be deployed, coupled with heavy investment in human capital development and upskilling.
Technology adoption is likely to play an increasingly important role in reducing labor dependencies while supporting productivity and competitiveness. AI automation and substitution could be particularly relevant in government services—some governments have put in place ambitious targets—as well as in other labor-dependent functions with a high share of routine, automatable tasks. But sovereignty in AI and other advanced technologies is difficult to achieve. GCC governments will likely continue to need international support in these and other areas.
Implications for Businesses and Investors
The shifts underway across the GCC are likely to have implications far beyond the region itself. Three topics should be top of mind for international business executives.
First, the infrastructure window is open now. Construction firms, operators, and logistics players, as well as companies in related sectors, should move swiftly to assess emerging opportunities in the region and as GCC energy players expand their international footprint.
Second, international companies should assess the opportunities from shifting regional supply chains. Evolving trade and logistics corridors, coupled with new partnerships, trade deals, and localization policies, will create opportunities for new supplier and manufacturing relationships in multiple sectors, including food, biopharma, technology, and defense. Companies and investors can play a part in national resilience agendas, industrial expansion, and workforce development. They should study government priorities and identify opportunities for partnering with local players and organizations.
Third, international investors and companies should assess their exposure to changing GCC outbound investment. Some sectors, such as those linked to high-profile assets (sports clubs, for example), may experience decreasing sovereign wealth activity, while others, especially those linked to resilience, infrastructure, AI, energy, food security, and defense, may see increased momentum.
The GCC is entering a period of accelerated strategic adaptation shaped by the lessons of regional conflict and wider global dynamics. The pace and urgency of change are on the rise as conflict and geopolitical risk create new challenges, including for international businesses and investors. Countries are redesigning their economies to increase resilience and sovereignty and preserve their strategic options. The GCC is already deeply integrated into global trade, energy systems, investment flows, and strategic industries. Developments in the region are likely to shape international business dynamics even more broadly in the future.
The authors thank Luis Miguel Centanaro for his contributions to this article.
