The GCC in global trade: a new era of economic diversification and partnerships

Apr 16, 2024

The GCC in global trade: a new era of economic diversification and partnerships

Apr 16, 2024

The Gulf Cooperation Council (GCC), a grouping of 6 countries comprising of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, stands at the apex of a transformative era. As the backbone of the global energy market, the GCC has long fueled industries worldwide. Yet, the region can no longer be content to rest on its laurels. Today, we witness a remarkable shift towards a more diversified and sustainable economic model, steering the GCC into new global trade and partnership frontiers.

This is the first blog article in a series of three on the role of the GCC in global trade.

Economic diversification

The heart of this transformation is encapsulated in ambitious initiatives like Saudi Arabia’s Vision 2030. Spearheaded by Crown Prince Mohammed bin Salman, Vision 2030 aims to redefine the kingdom’s economic landscape by boosting the private sector, creating employment opportunities, and attracting foreign investment beyond the oil domain. As confirmed during the recent COP28 summit of world leaders in Dubai, the world has declared the end of fossil fuels in the next few decades. The diversification strategy as such is a logical move and sheer necessity. Tourism, entertainment, infrastructure, and logistics emerge as key sectors slated for exponential growth.

Similarly, the UAE has not only maintained its status as a commerce hub with its world-class infrastructure but also pushed the envelope in becoming a strategic gateway connecting
global markets. From Dubai’s rise as a global business nucleus to Abu Dhabi’s economic incentives, the emphasis on infrastructure, technology, renewable energy, and healthcare
sectors is evident.

This pivot towards diversification reveals a fundamental and strategic foresight, aiming to harness the youthful, tech-savvy populations and burgeoning entrepreneurial ecosystems
across the GCC. It’s a clear signal to the world: the GCC is building a multifaceted economy ready for the future.

Growing as a trade hub

Recent trade data underscores the GCC’s growing importance in the intranational trade arena. Saudi Arabia alone saw its exports grow by more than 40% between 2018 and 2022 to more than USD 411 billion. Imports grew by a similar figure to some USD 190 billion in the same period. The UAE even saw its exports grow by more than 60% between 2018 and 2022 to more than USD 515 billion. Imports grew by a similar figure to some USD 420 billion in the same period.

We also see the trade of GCC member states diversify from traditional partners and sectors and increasingly find its way to Emerging Asia. Not just oil but the export portfolio extends significantly into non-oil sectors like technology, which are crucial for the region’s economic diversification.

Export visualisation Saudi Arabia

Global partnerships

A significant aspect of the GCC’s strategic reorientation is its deepening engagement with global economic blocs, most notably through the recent expansion of the BRICS+ group1. The inclusion of Saudi Arabia and the UAE into BRICS+, alongside nations like Iran, Egypt, and Ethiopia, marks a pivotal shift in global trade dynamics. This move is not merely about
diversifying economic partnerships but also about recalibrating the GCC’s position within the global economic order.

The accession to BRICS+ opens new avenues for the Gulf countries, particularly in strengthening trade relations with emerging markets and redefining its interactions with traditional partners. It signals a strategic alignment with countries that are increasingly influential in global trade, offering a platform for mutual understanding, especially in terms of investment, supply chains, and economic collaboration.

Moreover, the GCC’s engagement with BRICS+ could serve as a catalyst for enhanced cooperation with other key economies, including India, which seeks significant capital infusion for its infrastructure and manufacturing sectors. This alignment presents an opportunity for the GCC to leverage its capital-rich status, fostering investments that are mutually beneficial.

Towards a stronger role in international trade

As the GCC forges ahead with its visionary economic diversification and global partnerships, it ushers in a new era of global trade dynamics. The region’s strategic shift from an oil- dependent economy to a diversified and sustainable economic model reflects not just an adaptation to global economic trends but a proactive move to shape future trade patterns. Innovation, sustainability, and collaboration are important drivers in this strategy.

Stay tuned for our next blog in this series on the GCC in global trade, where we will dive into the GCC’s digital revolution, exploring how technological innovation is setting the stage for a future of advanced trade and finance.

1 BRICS stand for the grouping of countries including Brazil, Russia, India and China.

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