Gulf States Revise Growth Plans to Address Changes
Waleed Mansour: Gulf economies enter a new phase of transformation, requiring the development of planning tools in parallel with massive investments in infrastructure, technology, industry, and energy. This shift comes as economic, geopolitical, and climate variables become increasingly intertwined and influential in trade and investment flows. A recent report by LOGIC Consulting indicates that large-scale transformation programs require greater flexibility and continuous review of economic assumptions, enabling governments to respond to developments that may affect project costs, implementation schedules, and returns. This necessity arises because traditional planning tools—such as multi-year strategies, annual budgets, and fixed performance targets—are ill-suited for a rapidly changing world where risks intersect rather than appear in isolation.
Trade disruptions highlight the scale of this impact: shipping delays in the Red Sea caused the Suez Canal to lose an estimated $11 billion in revenues and foreign currency between December 2023 and July 2025. Meanwhile, trade volumes in Red Sea and Gulf countries declined by approximately 8% compared to pre-crisis levels.
**Massive Investments and the Imperative of Flexibility**
Flexibility in planning holds particular importance for the Gulf, where diversification programs rely on large-scale projects in construction, infrastructure, industry, logistics, energy, and technology. Climate change adds a new dimension to investment calculations. Global losses from natural disasters reached $368 billion in 2024, with weather-related events accounting for 93% of that total. Losses climbed to approximately $131 billion in the first half of 2025 alone.
The report notes that rising temperatures could directly impact labor productivity and the costs of executing Gulf projects, particularly activities dependent on outdoor work. Qatar is expected to lose approximately 5.3% of total working hours due to heat stress by 2030, compared to 4.1% in Bahrain and 2.6% in the UAE. This climate reality transforms environmental factors into economic variables that must be factored into productivity, timelines, and project costs, coinciding with rising insurance costs for infrastructure projects in risk-prone areas.
**The Race for Talent**
Transformation programs face another challenge: global competition for skilled labor, as Gulf economies pivot toward artificial intelligence, clean energy, advanced industries, and the digital economy. The report estimates that the world could face a shortage of up to 85 million unfilled jobs by 2030 due to skills gaps, potentially resulting in annual revenue losses of approximately $8.5 trillion.
This makes investment in human capital a fundamental component of the Gulf’s growth equation. Funding and infrastructure alone are no longer sufficient to launch new sectors; the ability to attract, develop, and retain local talent has become a key driver of achieving targeted returns. The report also emphasizes the importance of periodically reviewing the assumptions underpinning economic plans, rather than treating them as constants, especially since long-term projects may operate under conditions drastically different from those at their inception.
**Higher Returns**
The benefits of flexible planning extend beyond risk mitigation; they can also enhance profitability and investment value. The report cites Shell’s experience in using scenario planning in the early 1970s, which helped the company better prepare for the 1973 oil crisis. Furthermore, a long-term study cited in the report shows that companies with stronger capabilities to read and adapt to shifts achieved 33% higher profitability and 200% greater market value growth compared to their peers.
Gulf governments can apply this same logic to public investments by linking economic changes to budgetary and spending decisions, allowing for resource reallocation when market conditions shift. This implies moving away from treating economic plans as fixed paths toward more flexible management that preserves core objectives while adjusting implementation tools in response to changes.
**Promising Sectors**
Conversely, global transformations open wide investment opportunities for the Gulf, particularly in sectors where the region possesses the financial resources and infrastructure necessary to compete. The space economy, expected to grow globally from $630 billion in 2023 to $1.8 trillion by 2035, creates opportunities in satellites, communications, and digital services. Artificial intelligence also presents significant opportunities, though it increases energy demand; global data center electricity consumption could reach 945 terawatt-hours by 2030. Gulf states can leverage this trend by combining energy investments with data centers and AI, benefiting from the expansion of digital infrastructure, electricity projects, and renewable energy.
Critical minerals also emerge as a strategic element, as the top three refining countries now control 86% of global supplies, up from 82% in 2020, underscoring the importance of diversifying supply chains.
**Economic Flexibility**
The report concludes that economic planning must be directly linked to budgets and investments, making the review of variables a permanent part of project management. This approach helps Gulf economies protect their investments and adjust priorities when necessary, without abandoning the core goals of diversification and growth.
