Diversification Overview
Economic diversification is the defining strategic priority for every GCC state. Reducing dependence on hydrocarbon revenues is essential for fiscal sustainability, employment generation, and long-term competitiveness. The UAE has advanced further than most peers, but progress is uneven across the group.
Non-Oil GDP as Share of Total Output
| Country | Non-Oil GDP (% of Total, 2024) | Non-Oil GDP Growth (%, 2024) | Non-Oil Revenue (% of Govt Revenue) |
|---|---|---|---|
| UAE | 70 | 5.2 | 46 |
| Saudi Arabia | 60 | 4.8 | 32 |
| Qatar | 55 | 3.1 | 22 |
| Kuwait | 48 | 2.4 | 18 |
| Bahrain | 82 | 3.6 | 54 |
| Oman | 64 | 3.3 | 28 |
Sectoral Breadth Index
A composite measure of how many sectors contribute meaningfully (above 5 percent) to national GDP. Broader sectoral distribution indicates deeper diversification.
| Country | Sectors Above 5% of GDP | Top 3 Non-Oil Sectors | Herfindahl Concentration Index |
|---|---|---|---|
| UAE | 7 | Finance, Real Estate, Trade | 0.12 |
| Saudi Arabia | 5 | Construction, Finance, Manufacturing | 0.18 |
| Qatar | 4 | Finance, Construction, Transport | 0.22 |
| Kuwait | 3 | Finance, Real Estate, Construction | 0.28 |
| Bahrain | 5 | Finance, Aluminium, Real Estate | 0.16 |
| Oman | 5 | Manufacturing, Tourism, Logistics | 0.19 |
Export Diversification
| Country | Non-Oil Exports (% of Total, 2024) | Export Product Categories (>1% share) | Services Exports (USD bn) |
|---|---|---|---|
| UAE | 62 | 28 | 78 |
| Saudi Arabia | 22 | 14 | 31 |
| Qatar | 8 | 6 | 14 |
| Kuwait | 10 | 7 | 8 |
| Bahrain | 48 | 12 | 9 |
| Oman | 34 | 15 | 6 |
Relative Positioning Analysis
The UAE demonstrates the most advanced diversification profile in the GCC by most measures. Its non-oil GDP share of 70 percent, combined with the broadest sectoral distribution and the highest number of non-oil export categories, positions it as the benchmark for regional peers. Bahrain records a higher non-oil GDP share at 82 percent, but this reflects its limited hydrocarbon reserves rather than deliberate diversification strategy at comparable scale.
Saudi Arabia is the most significant diversification story by ambition and investment volume. Vision 2030 has mobilised hundreds of billions in non-oil sector investment, but the structural shift from a 40 percent oil-GDP base with a population of 36 million presents fundamentally different challenges than the UAE faced.
Trend Analysis
The diversification gap between the UAE and the rest of the GCC has been narrowing since 2020, driven by aggressive Saudi investment programmes and Oman’s sustained logistics and manufacturing push. Kuwait remains the outlier, with limited progress on diversification despite repeated policy commitments. Qatar’s diversification has stalled as LNG expansion refocuses capital toward the hydrocarbon sector.
Strategic Implications
Maintaining the UAE’s diversification lead requires continuous investment in high-complexity sectors including advanced manufacturing, financial technology, and knowledge-intensive services. The competitive threat is not that peers will match the UAE’s current position but that Saudi Arabia’s scale advantages could attract industries that require larger domestic markets, potentially redirecting FDI flows that currently favour the Emirates.