Gulf non-oil exports are doing more, but have more to do

Saudi Arabia and the UAE lead the region in this key diversification indicator, as China and India emerge as key partners

Al Majalla

Gulf non-oil exports are doing more, but have more to do

Amer Ziab Al-Tamimi

last update on 25 Nov 2025

After more than 70 years of earning almost all their money from oil, recent data on exports from Gulf Cooperation Council (GCC) countries show a significant rise in the value of their non-oil exports, signalling a long-awaited economic diversification.

In Saudi Arabia, where a central Vision 2030 objective is to broaden the country’s economic base, non-oil exports rose by 17.8% in the second quarter of 2025, while the United Arab Emirates recorded a notable 34.7% increase in non-oil exports during the first half of the year, valued at $100.6bn.

Non-oil exports across the Gulf now encompass a broad range of sectors, most notably financial services, manufacturing, tourism, and manufacturing. There are ongoing efforts to upgrade tourism infrastructure, revitalise financial services, and invest in technology, not least in Artificial Intelligence (AI), but these efforts vary across Gulf states, reflecting differences in administrative capacity, political vision, and each country’s comparative advantages.

Despite the variation, data trends indicate a growing contribution of non-oil activities to Gulf economies, with some estimates suggesting it could surpass oil revenues over the coming years. If so, this would mark a seismic structural shift in Gulf development models.

Rapid non-oil growth

The UAE’s non-oil exports in the first half of 2025 are at historic highs, but it is not alone in growing its non-oil sectors. In the Sultanate of Oman, non-oil exports for the first six months of 2025 came to $3.5bn, up 1.9% over the same period in 2024. While modest, this growth indicates some stability in non-oil sectors despite regional economic challenges.

In Saudi Arabia, non-oil exports grew by 13.4% in the first quarter of 2025 and rose further to 17.8% in the second quarter. In 2024, the value of these exports reached $82bn, in itself up by 13.1% from 2023. Qatar’s non-oil exports in 2024 came to $20bn, ranking it third in the Gulf after Saudi Arabia and the UAE. In Kuwait, non-oil exports from the first half of 2025 were valued at $5.2bn. In Bahrain, they were valued at $12.5bn in 2024, a strong performance given the size of its economy.

Saudi Arabia’s non-oil exports are primarily composed of machinery and electrical equipment, chemical industry products, vehicles, construction materials, food, precious metals, plastics, and rubber. UAE exports include pearls, precious metals, gemstones, vehicles, and parts. Many of these exports are thought to consist of re-exports, as several Gulf states still act as hubs for re-exporting goods to nearby markets such as Iran and Iraq, supported by their strategic geographic location and advanced logistics infrastructure.

In Kuwait and Qatar, non-oil exports include chemical products plus electrical machinery and equipment. Oman’s non-oil exports include chemical products and metals, as well as artisanal products. In Bahrain, aluminium has long been a cornerstone of non-oil exports since the founding of Alba Aluminium, one of the world’s largest smelters.

Non-oil exports across the Gulf now encompass sectors such as financial services, manufacturing, tourism, and manufacturing

Beyond hydrocarbons

Service exports are vital, and all Gulf states have reinforced their presence in banking and finance, developing their commercial and consultancy services both regionally and globally. Tourism is also experiencing rapid growth, emerging as a key source of foreign revenue. Millions now visit the Gulf every year. Their spending on accommodation, food, transport, and entertainment provides a revenue boost.

GCC states trade with each other, exchanging locally or regionally produced goods as well as re-exported items, yet Gulf states also maintain strong commercial ties with Asian countries such as China, India, South Korea, and Malaysia, showing the diversity of Gulf export destinations and the region's expanding role within global supply chains.

China is the top non-oil trade partner for both Saudi Arabia and the UAE, followed by India, Japan, and South Korea. GCC states have signed trade agreements with several Asian partners to ease the flow of goods and services and promote investment, while strengthening trade ties with India and holding talks with Japan over a comprehensive agreement covering mutual investment and the development of non-oil trade.

Reuters — Saudi Energy Minister Prince Abdulaziz bin Salman speaks at a session during the Arab-Chinese Business Conference in Riyadh, on 11 June 2023.

The deepening economic ties between the Gulf and Asia have also been mirrored by a growing number of Asian visitors to the Gulf, fuelled by rising income levels in their home countries. Gulf states have eased their passage, amending their entry and visa systems to better capitalise on this tourism momentum.

Boosting the private sector

Although oil trade in the Gulf is largely managed by state entities, trade in goods and services offers opportunities for private companies. To further boost the private sector, Gulf states are being urged to offer incentives to increase their share of non-oil exports. Export financing systems, for instance, can help drive competitiveness and diversify external markets.

Successful models from export-oriented industrial nations can be adopted by establishing effective export financing systems and institutions, enhancing the role of Gulf banks to support export activities, or allocating government financial portfolios within banks to back non-oil exports. Such mechanisms will let the private sector expand globally, which in turn will contribute to the balance of payments.

To further boost the contribution of non-oil exports to Gulf economies, customs and administrative barriers encountered by Gulf products in importing countries could be eliminated, most obviously through bilateral and multilateral trade agreements that facilitate easier access to foreign markets. At the same time, technical, financial, and legislative incentives for the private sector can aid production and export capabilities.

Developing non-oil export systems in Gulf countries calls for deeper regional cooperation and the structured organisation of export-oriented industries based on feasibility and comparative advantage. This involves the geographic distribution of production activities among member states to promote economic integration.

Another idea is to collectively leverage trade agreements signed by individual Gulf states, extending their benefits to other member countries, thereby broadening the scope of shared gains and reinforcing the Gulf's collective negotiating position. In the same vein, export development programmes would benefit from expanding participation by national and Gulf labour in non-oil industries through targeted training and qualification schemes in sectors such as manufacturing, agriculture, tourism, and financial services, all of which are key to diversification. It is clear that non-oil exports will drive economic diversification in Gulf states. The more that can be done to drive this, the better.

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