Gulf Cooperation Council states are deepening their economic diversification efforts in 2026, with non-oil sectors now accounting for a growing share of GDP across the six-member bloc. The shift, long discussed as a strategic imperative, is showing measurable progress — though the region’s economies remain substantially underpinned by hydrocarbon revenues and the fiscal buffers they provide.
Saudi Arabia continues to set the pace. The kingdom’s non-oil GDP growth has outpaced overall GDP growth for the sixth consecutive year, driven by construction, financial services, and tourism. The Public Investment Fund (PIF), the kingdom’s $900 billion sovereign wealth vehicle, has seeded new domestic enterprises in electric vehicles (Ceer), renewable energy (ACWA Power expansion), and entertainment (Alat and Savvy Games Group), with the aim of creating private-sector jobs for a young and growing population. Saudi non-oil exports reached approximately $85 billion in 2025, a record, Dubai Weekly notes.
The UAE, the Gulf’s most diversified economy, has seen its non-oil sector contribute over 72% of GDP — among the highest ratios in theregion. Manufacturing, logistics, financial services, and tourism each represent meaningful and growing shares of economic output. The UAE’s industrial strategy, “Operation 300bn,” targets AED 300 billion in manufacturing output by 2031, with significant progress reported in metals, chemicals, and food processing sub-sectors.
Qatar has leaned into its LNG revenue windfall to fund diversification, channelling surplus hydrocarbon income into logistics (Hamad Port and the emerging Ras Bufsidah industrial zone), financial services via the Qatar Financial Centre, and a growing sports and events economy anchored by the 2022 FIFA World Cup legacy infrastructure. The Qatar Investment Authority has also increased allocations to domestic venture capital and startup ecosystems.
Oman, historically the GCC’s most fiscally constrained member, has made tangible progress under its Vision 2040 plan. The sultanate’s tourism sector has been a standout, with visitor arrivals exceeding 4 million in 2025 for the first time. Oman’s logistics and mining sectors are also attracting foreign direct investment, particularly from UAE and Indian operators. The government has maintained disciplined fiscal reforms, including the introduction of a 5% value-added tax in 2023.
Bahrain and Kuwait present a more mixed picture. Bahrain’s financial services sector, particularly Islamic banking, remains a strength, but the kingdom’s fiscal position is tighter than its neighbours’. Kuwait, hampered by parliamentary gridlock that has slowed debt-management and diversification legislation, has lagged on infrastructure investment — though recent approvals for the long-delayed Silk City and Bubiyan Island development suggest some political impetus is returning.
Across the GCC, common themes emerge: sovereign wealth fund deployment as a diversification catalyst, regulatory liberalisation to attract foreign direct investment (including 100% foreign ownership in most sectors in the UAE and Saudi Arabia), and heavy investment in human capital through education and visa-reform programmes. The question for the second half of the decade is whether non-oil sectors can achieve escape velocity — generating enough private-sector employment, export revenue, and fiscal contribution to reduce the region’s structural dependence on volatile hydrocarbon income. The trajectory is promising, but the distance to the destination remains considerable.
Sources: Saudi Ministry of Investment reports, UAE Ministry of Economy data, Qatar Financial Centre disclosures, Oman Ministry of Commerce figures, IMF GCC regional outlook. Some GDP share and export figures are based on government disclosures and have not been independently verified by Dubai Weekly.
Related: Dubai Weekly — UAE Business News
