Why Middle East’s CEOs are backing their own markets

Across much of the Western world, economic narratives have become increasingly cautious. Rising public debt and slowing productivity are eroding the chances of medium-term growth in several advanced economies.

In Europe in particular, economic optimism has given way to domestic introspection, with a growing recognition that sustained growth will remain elusive without deep structural reforms and a reset of national economic strategies. At the World Economic Forum Annual Meeting last month, the organization said Europe faces an “annual investment challenge” of €1.2 trillion ($1.4 trillion) to match its ambitions with economic reality.

Business confidence across the Middle East, meanwhile, is at a record high. Almost nine in 10 regional CEOs expressed “exceptional confidence” in economic growth within their own territories, according to PwC’s latest annual “Global CEO Survey,” which was published last month. In the Gulf, CEOs are even more bullish, with 93 percent confident that growth would continue at pace over the near to medium term.

Hani Ashkar, PwC’s Middle East senior partner, said that the survey’s findings “reflect the underlying confidence” of the region’s business ecosystem, with business leaders demonstrating a willingness to look beyond the “short-term volatility” associated with regional geopolitics.

What sets the Middle East apart, particularly the Gulf countries, is the scale of ambition of national economic strategies

Dr. Majid Rafizadeh

The Middle East is no longer simply an attractive destination for global capital, it is an increasingly important contributor to global growth. And the contrast with many European economies is now hard to ignore.

What sets the Middle East apart, particularly the Gulf countries, is the scale of ambition of national economic strategies and the speed with which they are being executed relative to their peers.

Both the UAE and Saudi Arabia rank among the world’s top 10 destinations for international investment, according to PwC. They are also both guided by state-led agendas focused on the development and facilitation of the technologies that are expected to drive the next wave of global economic transformation.

Artificial intelligence sits at the heart of these plans, with increased investment in the development of AI infrastructure seen as critical.

The UAE’s National Strategy for Artificial Intelligence 2031 aims to secure 335 billion UAE dirhams ($91 billion) in AI growth and is embedding AI education into schools. The Saudi equivalent, the National Strategy for Data and AI, is looking to create an ecosystem of more than 300 native AI startups. Investment in AI infrastructure, especially in large-scale data center projects, is expected to generate between $5 billion and $7 billion in international investment in the Gulf in 2026 alone.

Gulf states are playing to their strengths. Leveraging low-cost electricity generation, as well as their vast expanses of available land, both the UAE and Saudi Arabia are becoming global hubs of next-generation data center development. State-led programs have accelerated large-scale investment, creating infrastructure that is available to smaller and emerging businesses. The deployment of AI is increasingly being adopted throughout the Gulf.

PwC’s CEO survey highlights the impact of embedding technology at the core of national economic strategies. Eighty-two percent of respondents reported that their organizations are actively pushing toward a culture of AI adoption within everyday working practices, while 40 percent said AI has already been integrated into support services.

A separate PwC survey published in December showed that the Middle East is seeing a higher rate of AI integration into business practices than the global average. Seventy-five percent of the region’s employees are using AI tools at work, compared to an average of 69 percent worldwide. Ashkar said that Middle Eastern companies are both “advancing responsible AI practices” and “strengthening digital infrastructure.”

What this has created across the Middle East is an ecosystem that retains capital and compounds its own momentum. Ambition fuels ambition and regional economies are beginning to benefit from that dynamic.

What this has created across the region is an ecosystem that retains capital and compounds its own momentum

Dr. Majid Rafizadeh

The effects on capital markets are becoming clearer, with technology and AI driving increasing activity. Mergers and acquisitions activity in the Middle East saw a rise of 19 percent in the first half of 2025 — a trend that is set to continue, as 72 percent of Gulf CEOs say they are planning a major acquisition in the next three years. Initial public offering markets have also strengthened. Saudi Arabia raised $4.1 billion through listings in 2025, while the Muscat Securities Market recorded a 28.1 percent year-on-year gain.

The Gulf is also emerging as a significant anchor for global venture capital flows. It is competing more directly with the traditional hubs in the US and Europe. Venture capital funding in the Middle East reached record levels in 2025, with $3.8 billion raised for the region’s expanding startup ecosystem.

Careem, Noon and fintech platforms like Tamara suggest the Gulf is not just home to new companies but increasingly competitive ones. A top-down culture of consistent regulation and business-friendly economic frameworks is attracting companies and capital to the region. Fundamentally, capital follows consistent execution.

While 57 percent of CEOs did express concern about the region’s geopolitical situation, the prevailing narrative remains one of economic momentum tempered by risk awareness.

The contrast between the European and Middle Eastern narratives is clear. Allianz Trade predicts that European growth will be “weak” and limited to between 1 percent and 2 percent in 2026. The Gulf, by contrast, is expected to expand its collective gross domestic product by an average of 4.5 percent.

PwC’s survey is also telling in this regard. Seventy-two percent of Middle Eastern CEOs’ planned investments outside their home countries are set to stay within the regional market, while only 6 percent of outbound investment will go to Western Europe.

What PwC’s survey reveals is that the Middle East’s economic story has captured the attention of investors through a combination of ambition, execution and policy clarity. That combination helps explain why the Middle East is emerging as one of the world’s major economic hubs.

• Dr. Majid Rafizadeh is a Harvard-educated Iranian-American political scientist. X: @Dr_Rafizadeh