PwC Middle East Economy Watch: The GCC’s roadmap for resilience amid energy and trade pressures

PwC Middle East’s latest Middle East Economy Watch: The GCC’s roadmap for resilience examines how evolving conditions affecting oil exports, trade and supply chains linked to the ongoing Middle East conflict are impacting the GCC outlook.

Governments and businesses across the GCC have responded to preserve energy flows, maintain trade links and support liquidity, while longer-term priorities are likely to shift towards resilience, trade route diversification and infrastructure protection.

Supply, energy and confidence under pressure

The impact on shipping through the Strait of Hormuz has affected regional energy and trade flows.  OPEC data shows that crude oil production across seven OPEC+ members bordering the Strait of Hormuz fell to 14.6 million barrels per day in April, down around 40% compared with February levels.

Saudi Arabia’s Q1 2026 GDP estimate showed annual growth of 2.8%, but output contracted by 1.5% quarter on quarter, driven by a 7.2% decline in oil sector activity.

The IMF’s April 2026 forecasts project GCC GDP growth slowing to 1.8% year on year in 2026, compared with a previous forecast of 4.4%. Aggregate GCC fiscal balances are projected at around -1.4% of GDP.

Richard Boxshall, Partner and Chief Economist, PwC Middle East, said: “The situation highlights the extent to which resilience has become an economic priority across the GCC. Governments and businesses have responded quickly to preserve stability, maintain continuity and strengthen resilience across critical sectors.”

The report also notes that LNG facilities in the region were affected, with full restoration not expected until at least the end of August.

The road to recovery – adjustments underway

Governments and businesses across the GCC are adapting through supply-chain reconfiguration, fiscal support and liquidity measures.

Saudi Arabia increased cargo train frequency and established new intra-GCC shipping routes linking Dammam with Abu Dhabi and Sharjah, while redirected trade flows have increased pressure on Red Sea ports and alternative logistics corridors.

Dubai announced a Dh1 billion (US$272 million) stimulus package to support businesses and tourism-related sectors. Bahrain used public unemployment funds to pay US$249 million in April salaries for Bahraini private-sector workers.

Central banks across Bahrain, Kuwait, Qatar and the UAE also introduced support measures, including:

Reserve requirement reductions from 5.0% to 3.5% in Bahrain and from 4.5% to 3.5% in Qatar.
Liquidity coverage ratio reductions from 100% to 80% in Bahrain and Kuwait.
Expanded repo and liquidity facilities across multiple markets.

The UAE and Bahrain additionally signed a US$5.4 billion currency swap agreement to support financial stability.

Jing Teow, Partner, Economic Policy and Strategy, PwC Middle East, said: “The regional response demonstrates how crisis preparedness and institutional coordination have enabled economies to continue functioning under more challenging conditions. The focus is now shifting towards creating the conditions for faster recovery and longer-term resilience.”

Rebuilding – making trade route diversification a central priority

Alternative pipeline infrastructure

In the longer term, as the region emerges from disruption toward recovery, the report identifies trade route diversification as a central strategic priority for the GCC.

Existing pipeline infrastructure connecting oil production hubs to ports outside the Strait of Hormuz enabled some energy exports to continue despite the disruption. The report highlights the strategic importance of the 380km Habshan–Fujairah Pipeline, which cost around US$4 billion and took three years to build. The UAE has also announced plans to double the pipeline’s capacity, reinforcing the strategic importance of alternative export routes.

Longer term, larger corridor projects are gaining momentum. One proposal under discussion is a 1,700km “GCC Super Express Pipeline” from Iraq to Oman, with capacity of up to 10 million barrels per day and an estimated cost of US$55 billion.

Complemented by multimodal trade and regional corridors

The report also highlights the growing importance of multimodal transport corridors:

The 1,700km GCC Railway project is now 50% complete and scheduled for full operation by 2030.

The 238km Hafeet Rail project linking the UAE and Oman is 40% complete.

Iraq’s Development Road corridor is planned to handle up to 25 million tonnes of cargo annually.

These projects are expected to strengthen regional logistics flexibility, reduce dependence on maritime chokepoints and reinforce the GCC’s position as a globally connected trade hub.

The report also identifies five strategic priorities for businesses operating in the region: strengthening supply-chain visibility, safeguarding liquidity, reinforcing cyber verification, establishing clear crisis governance and identifying critical operational vulnerabilities.

The report concludes that resilience is increasingly becoming a defining economic priority across the GCC, shaping future investment in trade, infrastructure, finance and supply chains.