GCC Economic Shift: Non-Oil Sector in Charge

The Economic Transformation of GCC Countries: Non-Oil Sector Leads in 2023

The economic performance of the Gulf Cooperation Council (GCC) member states—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—underwent a remarkable transformation in 2023. Although the gross national income (GNI) showed a slight decline, the growing role of the non-oil sector became crucial for sustainable economic development. Data indicates that the GCC region is successfully progressing along its diversification efforts, particularly in countries like the UAE, where investments in non-oil economic sectors are prioritized.

$2.143 trillion – GNI value at the end of 2023

According to the latest report from GCC-Stat, the GNI of the GCC countries reached $2.143 trillion in 2023, marking a 2.7% decrease from the 2022 figure of $2.202.7 trillion. Concurrently, the gross national disposable income— the amount available for consumption and savings—was $1.989 trillion, compared to $2.515 trillion the previous year, representing a 3% decline.

While the decline in total income might initially suggest negative trends, detailed data presents a more nuanced picture. The decline is largely explained by the volatility of global oil prices and geopolitical tensions, but these factors did not prevent the region from strengthening its non-oil economy.

Significant Growth in the Role of the Non-Oil Sector

The structure of the GCC's GDP underwent a significant transformation in 2023. The contribution of the non-oil sector to GDP reached 71.5%, up from 65% in 2022. This 6.4% annual growth represents a marked advancement in economic diversification.

The total added value in the non-oil sector was $1.513 trillion, while the oil sector contributed only $603.5 billion. This proportionate gain of the non-oil sector across all GCC member countries, particularly in Dubai and Abu Dhabi, validates the success of the long-term economic strategy.

Which Sectors Are Leading Growth?

Within the non-oil sector, the manufacturing industry made the largest contribution, averaging 11.7% to GDP. Over the past five years, however, mining and quarrying remained the most significant economic activity with an average share of 28.3%. However, this sector showed an 18.8% decline in 2023, demonstrating a shift toward a more sustainable, less oil-dependent economy.

The fastest-growing sectors included:

Financial and insurance activities – 11.7% growth

Transportation and storage – 11.6%

Real estate activities – 8.1%

Public administration and defense – 7.9%

Wholesale and retail trade – 7.6%

Education – 5.5%

This demonstrates that the GCC region is strengthening not only as an industrial but also as a knowledge-based and service-oriented economy.

Trade Balance and Expenditure Structure

From an expenditure perspective, foreign trade remains a key determinant for the region's GDP. The export of products and services reached $1.2587 trillion in 2023, accounting for 59.5% of GDP. However, this marks a 7.1% decrease compared to the previous year, partly due to falling oil exports.

Final consumption expenditure—the amount spent by households, non-profit organizations, and the government on direct needs—reached $1.245 trillion, showing a 7.5% increase. This indicates that consumer spending habits have stabilized and internal demand is strengthening.

Capital accumulation—new investments, construction, and other assets—reached a total value of $601.8 billion in 2023, growing by 5.5% yearly. This reaffirms the region's long-term developmental goals, especially in infrastructure and the digital economy.

The Role of Dubai and the UAE in Economic Diversification

Dubai plays a prominent role in the GCC's economic transformation. For a long time, the emirate has based its growth on tourism, logistics, financial services, and technological innovation. The rise of non-oil investments in Dubai is exemplary for the entire region. Initiatives such as green energy investments, digital ticketing systems, or artificial intelligence hubs reflect future-oriented thinking.

The UAE's economy is becoming less dependent on the oil industry and increasingly relies on knowledge-based, high value-added sectors. GCC-level data confirms this trend.

Summary

The year 2023 was one of economic restructuring and diversification for the GCC. Global economic challenges and fluctuations in the oil market restrained the gross national income, but the advance of the non-oil sector opened up new opportunities for the region.

The path to sustainable development is already laid out—with financial services, education, logistics, and innovation leading the economy of the future. The examples of Dubai and other major cities show that ambitious economic plans and diversification can yield real results, even in traditionally oil-dependent regions.

(Source: Statistical Centre for the Cooperation Council for the Arab Countries of the Gulf (GCC-Stat) announcement.)