This year, despite a confluence of problems: inflation, sluggish consumer spending, tariff headwinds, and softer oil prices, GCC’s economy expanded to over 4 percent and is likely to grow to 4.5 percent in 2026. 

Pro-growth policies and broad-based economic diversification are powering this growth momentum, especially in Saudi Arabia and the UAE. Not surprisingly, non-oil activities contributed 73.2 percent of the GCC’s GDP.

The rapid advancement of the digital economy has reshaped economic structures in the region, as countries have made a significant push for high-tech and green industries. Yet, fostering high-quality economic growth remains insufficiently explored.

PUSH FOR FUTURE INDUSTRIES

Experts say that GCC economies need to actively promote emerging industries, such as humanoid robots, quantum information, and biomedicine, to become more resilient. An industrial strategy backing these sectors will create jobs and drive long-term, high-quality economic growth.

“Our focus should be on emerging deep tech sectors, including AI, robotics, cybersecurity, and climate tech, to solve pressing industry problems,” says Reda Nidhakou, CEO of VentureOne, Abu Dhabi’s Advanced Technology Research Council’s (ATRC) venture builder, which has launched ventures in these areas over the last year and a half.

“We’ve already experienced significant growth. This demonstrates the potential of these industries for sustainable growth and tangible impact,” adds Nidhakou.

These industries, which are being gradually integrated into national strategies across the region, are expected to drive growth, foster the development of new productive forces, overhaul the skills system, and channel fresh investment into high-growth areas, thereby underpinning a shift toward high-quality economic development.

Dr. Chaouki Kasmi, Chief Innovation Officer at Technology Innovation Institute (TII), says, “We the UAE 2031 plan and its National Strategy for Advanced Technology, flagship R&D centers, global research partnerships, and pilot deployments in logistics, healthcare, and smart cities are creating a living testbed for humanoids, Physical AI, and post-quantum cryptography.”

Others believe that rather than investing in a single sector, the true opportunity lies in incorporating AI throughout every aspect of society—from healthcare and logistics to education and even the home.“The priority now is to shift from lab-based AI to everyday AI: intelligent, ethical, and trusted systems that become integral to daily life,” says Gérard Biau, professor of statistics at Sorbonne University and Director of the Sorbonne Center for Artificial Intelligence (SCAI).

“Responsible, large-scale adoption can amplify impact across all sectors. By focusing on meaningful and grounded implementation, the GCC has a unique opportunity to take the lead.”

Nidhakou adds that humanoid robotics, quantum, and AI are emerging as vital sectors to address key challenges such as labor and capacity shortages and safety issues. 

ADOPTION AND PRODUCTION

While a dozen future industries, with AI, clean tech, photonics and electronics (semiconductors), and space tech, are expected to generate trillions of dollars in revenue globally over the next five years, Borko Handjiski, Partner, Government and Public Institutions at Oliver Wyman, says for GCC economies, the push into new technologies must follow two tracks: adoption and production. 

“While adoption is critical for the overall economy to remain competitive, production drives national development and moves countries to the cutting edge.”

Several GCC nations have already placed their strategic bets on specific future industries for localized production, adds Handjiski. “For instance, the UAE is heavily investing in establishing a globally leading AI hub, backing local champions like G42, and forging partnerships with world-class companies such as Microsoft and Nvidia.” 

“This focused approach on key production sectors will be the main spark for an investment spree.”

Handjiski highlights that while the region is “perfectly positioned” to be a leader in the adoption of new technologies, particularly humanoid robots, which could significantly enhance productivity across early adopter companies and provide a strategic way to automate and replace low-skilled labor, in fields like biomedicine, the region should go beyond mere adoption. 

Saudi Arabia and the UAE have prioritized the life sciences in their national visions, committing significant investments to develop local R&D and pharmaceutical production capabilities. “This strategic investment in core infrastructure and talent signals a genuine intent to find a global footing in the sector,” says Handjiski.

According to Amr Kamel, GM of Microsoft UAE, AI alone could contribute $260 billion to the region’s GDP by 2030. “Coupled with the GCC’s strengths in renewables and infrastructure, these sectors can attract capital at scale and cement the region as a laboratory for future-ready economies.”

CHALLENGES AND TAILORED SOLUTIONS

As future industries transition from concept to deployment, tailored policies are also needed to address talent gaps, enhance collaboration, foster innovation ecosystems, and overcome structural constraints.

“The biggest hurdles are talent scarcity, regulatory frameworks, and scaling innovation beyond pilots,” says Kamel. “To move forward, the GCC must double down on digital skilling scale, supportive policies for IP and data, and incentives for research and startups.” 

Success in building future industries requires integrating upstream of the value chain, specifically the R&D stage, according to Handjiski.  “Today’s trillion-dollar companies thrive in innovation hubs where the core technology was originally invented and commercialized. Silicon Valley, home to OpenAI, Google, and Nvidia, is the definitive hub for AI, just as Basel is the epicenter for life sciences innovation and the world’s largest pharma companies.”

The GCC faces the challenges of replicating these innovation ecosystems across its diverse member states. While some countries, notably the UAE and Saudi Arabia, have made significant strides, the necessary conditions are not uniformly present across the region. 

The true challenge, Handjiski says, is to localize the critical factors that attract and retain world-class R&D. “The fruits of these efforts will accrue to those individual GCC economies that successfully and consistently establish an unmatched combination of factors: superior quality of life, cutting-edge infrastructure, and ease of doing business and employing top international talent, and agile, adaptive regulations that actively support the needs of innovators and entrepreneurs.”

Another big challenge is bridging the gap between a great idea or tech breakthrough and a product that can serve the market. “To succeed, a tech solution must address a specific need. In the current economy, it also needs to adapt as quickly as the market evolves, and scale sustainably,” says Nidhakou. “Companies can set themselves up for success by being client-centric and focusing on a clear use case, developing modular solutions, and collaborating with the right partners to build capacity.”

STURDY ENGINES DRIVING GROWTH

All agree that these future industries will serve as sturdy engines driving GCC’s future economic growth, and more efforts should be made in R&D, partnership, and boosting technological innovation.

Giving examples of VentureOne’s AI71, which specializes in AI agents and applications, QuantumGate, which offers post-quantum cybersecurity products, and SteerAI, which provides autonomous technology to logistics and defense fleets, Nidhakou says that the organization has “found its footing” largely because it has “focused on applied research and development, partnership, and solving real problems rather than simply chasing hype.”

As R&D investments show momentum in frontier technologies, collaborations to increase access to tech skills training are critical to paving the way for innovation and economic growth.

Prof. Biau adds that training and upskilling are essential. “Without local expertise, innovation simply stalls.” He says that SCAI has partnered with Abu Dhabi Investment Authority in AI education to build applied skills across multiple sectors to address that. “These initiatives aim to strengthen local capacities and ensure that the region doesn’t merely consume AI technologies but actively shapes their future.”

With the right partnerships between governments, universities, and global tech leaders, the GCC can accelerate breakthroughs in quantum and biotech, says Kamel. “Robotics and AI, powered by the cloud, can scale from pilot projects to commercial impact across healthcare, energy, and smart cities.”

Microsoft, in partnership with others, aims to train 1 million UAE learners in AI skills by 2027 and has co-founded the Responsible AI Foundation to set global-first standards. “These measures will ensure the GCC can mitigate risks while unlocking sustainable, high-quality growth across its digital and physical economies,” says Kamel.

Meanwhile, Dr. Kasmi says TII has already begun addressing challenges such as talent depth, fragmented research, and slow procurement. “Across the GCC, we’re upskilling our talent through advanced training programs and forging collaborations with global universities, private companies, and leading research centers.”

He adds that initiatives like the TII and Nvidia launch of the Middle East’s first joint AI & Robotics NVAITC Research Lab “exemplify co-developing frontier technologies.”

Even though these sectors make up a small proportion of the region’s GDP, longer-term demand fundamentals remain intact because of the productivity gains of these new industries and their increasing economic share in the economy. In a few years, these industries are expected to become a key alternative growth driver for the GCC.

Dr. Kasmi says, “Public-sector adoption of breakthrough tech is accelerating, turning visionary policies into real-world impact and sustaining the region’s technological leadership.”