Lifting GCC exports of non-oil goods to $1 trillion by 2030

If GCC countries craft and successfully execute a masterplan for the export of non-oil goods, they could see the value of these exports grow to a massive $1 trillion annually by 2030. That is according to analysis by Strategy&. Experts from the strategic consultancy firm outline what is needed to realize this bold objective.

GCC governments are reducing their reliance on oil revenues and building an export base of high-value-added goods and services. To move faster from oil exports to non-commoditized goods and services, GCC countries are expanding their industrial base beyond petrochemicals, supporting high productivity sectors, and entering competitive markets.

Non-oil goods exports have grown by a compound annual growth rate (CAGR) of 2% over the past 10 years. The World Bank estimates that GCC non-oil GDP growth reached 3.9% in 2023, while oil-generated revenues contracted by the same percentage.

With the correct measures, at Strategy&, we estimate that GCC countries could increase non-oil exports from $202 billion (2022 baseline) to $1 trillion annually by 2030. Our $1 trillion figure is based on past export growth, the comparative advantage of GCC countries in key export areas, and extrapolating top quartile export growth manifested by global benchmarks.

Three strategic actions

To capture this prize, GCC policymakers need to effectively pursue three sets of actions.

Develop non-oil sectors to boost exports
First, they can use targeted policies to develop sectors that grow exports rapidly. These sectors should align with each country’s strengths and resources, generate high levels of productivity and added value, while supporting long-term sustainability.

GCC governments should continue investing in non-oil sectors such as metals, plastics, minerals, machinery, and services. For instance, Saudi Arabia plans to invest $170 billion in mining to capitalize on its estimated $1.3 trillion worth of mineral resources.

Some of these sectors, such as chemicals, already have a high comparative advantage. Other sectors, such as foodstuffs, textiles, and transportation, have a rising comparative advantage, indicating increasing global competitive advantage that could accelerate export growth.

Nurture a trade-friendly ecosystem
Second, is nurturing a trade-friendly environment through a mix of policy action, infrastructure building, and human capital development. A comprehensive framework to attract foreign direct investment is essential to develop export capabilities in emerging sectors.

It should combine regulatory reforms, investment incentives, and streamlined business processes. Also required are trade policies and regulations that facilitate exports by simplifying customs procedures, reducing trade barriers, and international trade law compliance.

In terms of infrastructure, that means the physical, technological, and logistical investments necessary for diversification. That would enable the complex manufacturing required in sectors such as pharmaceuticals and advanced automotive.

Investments should include state-of-the-art digital technologies, like a ‘single trade window’ portal, which streamline the export process for traders, customs, and other government stakeholders. That includes transportation systems that move goods more efficiently, thereby attracting investment to export sectors.

Governments also must improve human capital through enhanced university education, training, and skill development for workers in new and emerging high export potential sectors. These efforts should encourage innovation and accelerate the adoption of new technologies to improve product quality, reduce production costs, and boost international competitiveness.

Because human capital development is a long-term endeavor, it is also vital to bolster efforts to attract global talent in emerging sectors. The continued expansion of sectors, such as manufacturing in Oman, depends on tapping global talent pools.

Expand access to foreign markets
Third, is enhancing access to foreign markets. Governments can deepen engagement with existing trade partners and venture into new markets. These require a long-term effort to achieve the difficult task of opening markets at a time when some countries are raising trade barriers.

In particular, GCC governments can pursue bilateral and multilateral trade agreements for enhanced export market access, and then pursue opportunities. That means financial incentives, such as tax exemptions and reduced tariffs, which support exporters seeking to meet international quality and safety standards and make their products globally competitive.

Importantly, exporter incentives must not undermine the negotiation of trade agreements, requiring a balancing act.

Governments also can facilitate export growth through trade promotion agencies. For instance, the Saudi Export Development Authority (SEDA) promotes the country’s export agenda. Entities such as SEDA can provide services including market research, trade fairs, and matchmaking with potential buyers.

Dedicated trade promotion agencies can also help across the export value chain, including exploring new markets, identifying and engaging with buyers, and export-import financing. They are effective at helping SMEs and new businesses to become exporters.

Conclusion

Leaders in the Gulf Cooperation Council have a vision to diversify and increase non-oil exports. Now is the time for policymakers to translate that vision into reality.

By accelerating these transformations, policy makers can reach $1 trillion in non-oil export revenues by 2030.

An article from Rasheed Eltayeb, Chadi Moujaes, Paul Saber and Sohaib Dar. All four are Partners and Principals in Strategy&’s team in the Middle East.

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