GCC's economic resilience hinges on trade policies and regional collaboration, according to KPMG's assessment.
In a bid to bolster economic growth and strengthen their global presence, the Gulf Cooperation Council (GCC) nations, including Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain, and Oman, are working together to implement coordinated trade policies and industrial strategies.
Under its Vision 2030 agenda, Saudi Arabia is prioritizing industrial localization and building domestic supply chains across chemicals, metals, pharmaceuticals, and renewable energy components in Riyadh. This move is aimed at creating added value across sectors and diversifying revenue sources.
The industrial sector is leading the transformation in Saudi Arabia, with initiatives such as 'Made in Saudi' boosting local content in both oil and non-oil sectors, which Saudi Arabia sees as central to its Fourth Industrial Revolution drive.
On the other hand, the UAE is deepening its role as a re-export hub by streamlining customs, negotiating bilateral trade agreements, and leveraging its free zones to attract global investment. This approach has helped the UAE position itself as a leading global logistics hub.
Since its founding in 1981, the GCC has evolved into a mature and successful trade and economic bloc. The GCC's historically open trade model, with average tariffs of around 5 percent, has supported integration into global markets and secured broad access to international inputs. The GCC's customs union agreement has eliminated intra-GCC tariffs, unified external tariffs, and eased trade restrictions.
However, KPMG cautions that diverging and fragmented trade and industrial strategies across the GCC region, coupled with a lack of coordination, risk weakening collective leverage in global negotiations. To address this, Omar Alhalabi, partner and head of economics and public policy advisory at KPMG Middle East, suggests using the Customs Union as a platform to align trade and industrial policy, coordinate negotiations in priority sectors, harmonize incentive frameworks, and co-finance joint industrial projects.
The World Bank projects that GCC growth will accelerate to 4.5% in 2026, with a growth of 3.2% expected in 2025. These measures, according to Alhalabi, would strengthen supply chain resilience, reduce external dependencies, and allow the region to engage globally from a position of strategic strength.
KPMG also emphasizes the importance of identifying supply chain risks, diversifying sources of critical inputs, and supporting outbound investment in upstream production. By doing so, the GCC member states can ensure greater economic stability and a stronger voice in global markets.
In conclusion, the GCC nations, led by Saudi Arabia, are taking significant steps to align their trade policies with their industrial development goals. With unity, integration, and ambition, they aim to create a more resilient and self-reliant regional economy, ready to face the challenges of the global market.
