- Over US$1 trillion in US-GCC deals announced during Trump’s visit, including major AI data centre and LNG agreements, deepening economic and technological ties.
- OPEC+ accelerates oil output hikes, lifting Saudi Arabia’s production to 9.37m b/d and supporting a projected 3.1% regional GDP growth in 2026.
- GCC data centre capacity to rise over 50%, from 648MW in 2024 to nearly 1GW in 2026, driven by AI growth and supportive regulation.
29 May 2025; Dubai, United Arab Emirates - PwC’s latest Middle East Economy Watch - Trump, tariffs, trade and tapering: Understanding the strategic shifts shaping the region - unpacks how the GCC is navigating a rapidly evolving economic landscape. Amid rising global uncertainty and pressure from low oil prices, the region is advancing with clear priorities: scaling up AI and data infrastructure, deepening ties with the US, and boosting non-oil growth. President Trump’s visit unlocked over $1 trillion in announced deals, reinforcing the region’s position as a key partner in energy, technology and trade.
The report examines the following:
Economic performance and outlook
OPEC+ reversed voluntary cuts earlier than planned, with Saudi Arabia’s June output target brought forward from October to 9.37m barrels/day. GCC-wide tapering is expected to boost oil sector GDP by 1.7% in 2025, with a further 0.5pp upside possible. Non-oil growth remains robust - Q4 2024 ranged from 4.0% in Kuwait to 7.1% in Abu Dhabi. Regional GDP is projected to grow 3.1% in 2026, nearly triple the 2023–24 average.
Fiscal balances, however, are under pressure. Saudi Arabia’s 2025 deficit is now expected to exceed double its original budget forecast of -2.3% of GDP, according to the IMF’s April update. Bahrain and Kuwait face deficits of -10.4% and -7.9%, respectively. Still, sovereign market access remains strong, with Saudi Arabia issuing US$31bn in debt in Q1 and Kuwait re-entering the bond market after an eight-year hiatus.
Richard Boxshall, Partner and Chief Economist, PwC Middle East, commented: "Lower-for-longer oil prices are putting pressure on fiscal positions across the region. However, higher production volumes and strong sovereign debt access are helping bridge the gap. GCC governments are using this window to stay the course on long-term investment plans, striking a careful balance between managing short-term pressures and advancing structural transformation”.
Trump’s trade agenda and the GCC - opportunities and risks
The US 10% universal tariff, announced on 2 April, is expected to have limited short-term impact on the GCC. Adding a new twist, on 28 May 2025, the US Court of International Trade has ruled that the US administration’s authority invoked under the International Emergency Economic Powers Act (IEEPA) to impose, amongst others, the so-called reciprocal tariffs does not give him unilateral authority to do so. Section 232 existing tariffs (covering steel, aluminium, automotive) remain unaffected and the goods covered will continue to be subject to the existing tariffs.
While Brent crude briefly dropped by US$12 per barrel following the announcement, prices have since partially recovered. Still, the initial volatility, combined with a weaker dollar and rising borrowing costs, temporarily intensified fiscal and trade pressures. This led to a spike in credit default swaps, particularly for Bahrain, Saudi Arabia, and Oman, though levels have since stabilised for stronger sovereigns.
Trump’s visit to Saudi Arabia, the UAE and Qatar led to US$1 trillion in announced deals: US$600bn from Saudi Arabia, US$243.5 bn from Qatar, and US$200bn from the UAE.
Artificial intelligence was a key theme. The UAE revealed plans for a 5GW AI data centre, while Saudi Arabia launched HUMAIN, a new national AI company. Both initiatives involve partnerships with leading US tech firms including OpenAI, xAI, and Nvidia.
Stephen Anderson, Partner and Strategy Leader, PwC Middle East, said: “The GCC is coming into its own, deploying capital, energy and partnerships to shape its digital and economic future. The scale of AI and infrastructure investments reflects a region that’s not just adapting to global shifts but actively helping define them.”
Strategic investments across sectors highlight the region’s intent to strengthen its presence in the US market and diversify its global influence. Aramco’s expansion of the Motiva refinery in Texas deepens energy integration, while ADNOC and KPC’s interest in US LNG reflects a push to secure future-ready energy portfolios.
Meanwhile, a $2bn crypto investment by MGX - using a Trump-family-backed stablecoin - signals the GCC’s growing ambition in digital finance and alignment with emerging US-led fintech ecosystems.
Data centre investments boom
Demand for data centres is surging, with GCC capacity set to grow over 50%, from 648MW in 2024 to nearly 1GW by 2026. This expansion is driven by AI processing demand, regulatory requirements (such as Saudi data localisation laws), and investor appetite. The GCC’s projected 15W/capita capacity by 2026 would double the global average of 7W/capita. The UAE and Qatar lead in per capita capacity.
What to expect next?
The GCC enters H2 2025 with strong growth momentum in non-oil sectors and strategic clarity on digital transformation. Regional leaders are navigating global shifts with confidence, steady investment, and a long-term vision.
For further insights, download the full Middle East Economy Watch – May 2025 report on our website.
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