Muscat – The GCC region has been a bright spot in the global economy, with member states enjoying sustained growth, contained inflation, and strong financial buffers, according to Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF).

“This success did not happen in a vacuum. GCC countries have been doubling down on difficult but necessary reforms: diversifying government revenues, improving the business climate, increasing access to finance, making labour markets more flexible, and raising women’s participation,” Georgieva said in her opening remarks at the World Government Summit 2025 in Dubai last week.

She acknowledged that these reforms have accelerated economic transformation and diversification in the region. “They have unlocked growth in new sectors such as tourism, logistics, finance, and renewable energy. So, please keep the momentum going! Further progress on these reforms will help GCC economies become more diversified and resilient.”

Georgieva outlined three key priorities for the GCC countries to continue enhancing their growth potential: increasing productivity, fostering innovation and entrepreneurship, and deepening regional economic integration.

According to IMF analysis, policies aimed at safeguarding macroeconomic stability and promoting digitalisation have been the most significant contributors to the GCC’s total factor productivity growth over the past two decades.

“Let’s start with the fundamental precondition – macroeconomic stability. Medium-term fiscal consolidation, with a focus on mobilising non-hydrocarbon revenues, would help ensure stability while increasing resources available for growth-enhancing investments,” Georgieva noted. “Fiscal consolidation should also be supported by better and more efficient public spending. Credible, medium-term fiscal frameworks will be essential.”

Turning to technology and innovation, Georgieva commended GCC countries for their strides in AI and digitalisation. “With AI initiatives and high levels of digitalisation, the region has built strong foundations to harness these transformative technologies. Greater productivity and consumer benefits from further AI adoption could, for instance, boost the UAE’s GDP by around 35% by 2030. To maximise the productivity gains from these advancements, investment in training and education will be crucial.”

On the second priority – enhancing the environment for innovation, creativity, and entrepreneurship – she stressed that human capital is a key driver of economic progress.

“Investing in education and skills development is essential to competing in a rapidly evolving global economy. Another catalyst for economic growth is R&D, which fosters technological innovation by generating new knowledge. Across the GCC, promising initiatives are underway to enhance the business environment and boost R&D investment. Upgrading regulatory frameworks and ensuring a level playing field can further encourage innovation.”

GCC economic integration

Regarding regional economic integration, Georgieva emphasised that greater collaboration among GCC countries could enhance efficiency, expand market size, and boost competitiveness.

“All of this can amplify the benefits of economic diversification and broader structural reforms. We also know that intra-regional trade fosters economic growth. Trade among GCC countries has grown rapidly – goods exports within the region have tripled over the past decade to more than $70bn. However, intra-GCC trade still accounts for less than 10% of the bloc’s total global exports, significantly below the 50–60% share seen in the EU.”

She added that increasing trade among GCC nations would require better harmonisation of regulations and standards, improved transportation networks, and more diversified economies.

“By deepening regional ties, the GCC can be a leader in economic cooperation and connectivity. By continuing to make progress in these areas, the region can maintain its position as a bright spot in the global economy, strengthen resilience, and chart a prosperous course for the future,” Georgieva concluded.