The next Gulf boom is already here, and it’s not oil

The UAE in particular has become a magnet for global capital and talent. With stable leadership, world-class infrastructure and consistently high rankings for ease of doing business, it offers a rare mix of opportunity and predictability. Its location, with near-equal access to Europe, Asia and Africa, only adds to its appeal.

Rethinking the Gulf economy: Oil vs. non-oil contributions

The numbers are starting to shift. In the UAE, non-oil sectors made up just over 73% of GDP in 2023, with further growth expected in 2024 and 2025. Saudi Arabia isn’t far behind. Its non-oil economy grew by 4.4% in 2023, while oil GDP dropped by 9%. That contrast says a lot.

Tourism, manufacturing, logistics, finance, and real estate are driving the change. Each is growing for different reasons, but together they’re giving the Gulf’s economies a broader base. Tech and digital services are also gaining ground, especially in places like the UAE, which continues to back AI, fintech and smart infrastructure.

Growth speed matters. Many of these sectors are expanding quickly, in some cases keeping pace with or even overtaking oil revenues. That shift is helping the region move toward a more balanced model, one that’s better able to handle changes in global energy demand.

It’s also helping the UAE attract record levels of foreign investment. According to the UNCTAD World Investment Report 2024, the country ranked among the global leaders for greenfield FDI projects, with $23 billion in inflows in 2023, making it the top FDI destination in the Middle East.

Fastest-growing sectors and emerging trends

Some sectors are pulling ahead. Tourism, tech, renewables, logistics and Islamic finance are among the fastest-growing, each boosted by a mix of local demand and foreign investment. In Saudi Arabia, tourism is a major focus. Projects like NEOM, The Red Sea, and Diriyah Gate are drawing global attention. The country saw over 30 million international visitors in 2024, a big jump from the year before. It’s also investing in logistics infrastructure, with billions going into rail, port, and airport expansion to support regional trade.

The UAE is pushing on several fronts. Operation 300bn aims to triple the industrial sector’s contribution to GDP by 2031. That includes building up areas like clean tech, advanced manufacturing, and food production. Abu Dhabi is adding another AED 10 billion to expand its own industrial base and double manufacturing output by the end of the decade.

One of the biggest current projects is the $3.9 billion Wynn Al Marjan Island Resort in Ras Al Khaimah, projected to generate up to $8 billion per annum. It’s the largest single FDI in the UAE’s hospitality sector to date, and a major vote of confidence in the emirate’s growing appeal to international operators. The Wynn project is already drawing other global hotel brands to the area, adding to RAK’s emergence as a luxury and adventure tourism hub.

Renewables are another area that’s scaling fast. The UAE now holds about 70% of the GCC’s clean energy capacity and is building on that lead with new solar and wind projects. Saudi Arabia’s NEOM Green Hydrogen Project is also moving ahead, and Oman is starting to attract serious interest in hydrogen exports.

Tech and digital services are getting a boost from AI adoption, fintech growth and major investments in data infrastructure. The UAE is positioning itself as a regional hub, with data centres, cloud services, and AI research centres rolling out across the country.

Part of the reason these sectors are growing is policy. Free zones, full foreign ownership in key industries, and fast-track licensing have made it easier for companies to set up and scale. Trade agreements like the UAE-India CEPA are also opening new doors.

As for whether oil will ever be off the table, it’s unlikely to disappear from the mix. But it’s becoming one part of a much larger story. Gulf countries are using today’s energy wealth to lay the groundwork for what comes next. If current trends hold, non-oil sectors could account for the majority of regional growth within the next decade. That wouldn’t mean zero oil, but it would mean less reliance on it to drive everything else.

GCC’s unique economic opportunities

Some sectors just work better in the Gulf than almost anywhere else. Tourism is one of them. Religious travel brings millions of visitors to Saudi Arabia each year, especially Makkah and Madinah. Then there’s the luxury side. Dubai, Abu Dhabi and now NEOM are building high-end destinations aimed at global travellers with spending power. With big events, new resorts and better air links, the region is carving out a clear niche.

Islamic finance is another standout. The Gulf’s banking sector has the capital, the customer base and the track record to lead on sharia-compliant lending, sukuk issuance and now ESG-linked Islamic products. While Islamic finance exists globally, the infrastructure, demand and regulation are all stronger here.

Food production is growing fast too, but in a very local way. Countries like the UAE, Saudi Arabia and Oman are putting serious money into desert agriculture with things like vertical farms, aquaponics and AI-powered greenhouses. It’s driven by food security goals and a need to make better use of land and water. That mix of pressure and investment is producing results.

Logistics has always been a strength. The region’s position between Asia, Europe and Africa gives it an edge, and governments are using it. Ports, airports, free zones and rail networks are all getting major upgrades. Companies want faster routes and fewer barriers, and the Gulf is leaning into that.

The UAE’s appeal also lies in its business-readiness. It ranks first globally for ease of getting electricity, with fast, cost-free connection and exceptional reliability — just one of many infrastructure advantages that support scale and speed.

What ties it together is scale. The Gulf has capital, infrastructure and political focus pushing these sectors forward. That gives ideas a chance to turn into businesses and pilot projects a path to regional rollout. For investors and operators with a long view, that matters.

Foreign investment: Where the smart money’s going

Foreign capital is following the action. Sectors like clean energy, tech, logistics, hospitality and advanced manufacturing are pulling in serious interest, and the reasons are plain. These are areas where governments are already spending, where local demand is growing, and where the business case is getting stronger year by year.

The region’s free zones and special economic areas keep that momentum going. They cut through red tape and offer clear tax advantages, including zero personal income tax and highly competitive corporate rates. That’s attractive on its own. Add 100% foreign ownership in many zones, and it makes sense why so many firms are using the Gulf as a base to sell into Africa, South Asia and beyond.

The UAE’s diversification push isn’t limited to its biggest cities. Ras Al Khaimah, for example, is drawing investment into tourism, manufacturing and real estate—powered by business zones like RAKEZ, streamlined setup processes, and a focus on scalable, mid-market growth. It’s a compelling example of how smaller emirates are scaling smart and sustainably.

The investment isn’t just coming from abroad. Local capital is moving too. Sovereign wealth funds like ADQ, PIF and Mubadala are putting billions into high-growth sectors. They’re doing it directly and through partnerships, sometimes alongside global investors, sometimes through local accelerator schemes. Either way, they’re giving early-stage companies the backing to scale and drawing more foreign firms into the mix.

Governments across the Gulf are putting the right pieces in place—funding, regulation and access—so that businesses can move quickly when the opportunity’s right. The focus is on sectors with clear long-term value, where global demand, regional strengths and local policy all line up.

Risks, challenges, and strategic business positioning

The shift away from oil is moving fast, but it’s not without friction. Talent shortages are already being felt, especially in tech, advanced manufacturing and clean energy. At the same time, rising construction and logistics costs are putting pressure on delivery timelines. Capacity is expanding across sectors, and if supply gets ahead of demand, that could slow returns. Add in climate-related pressures and the usual regional geopolitical risk, and there’s plenty to factor in.

Most of these challenges are manageable if businesses come in with a clear read on the region. The smartest move is to plug into national development goals early. Whether that’s renewable energy in Oman, logistics in Saudi Arabia or AI in the UAE, backing sectors that governments are prioritising helps smooth the path.

Local partnerships matter too. Working with regional suppliers and service providers can cut costs and delays. It also makes it easier to meet localisation targets, which are becoming more common.

Digital systems and sustainability standards are no longer optional. Both are being written into policy, licensing and funding frameworks. Companies that lead on these from the start will find it easier to win contracts, attract investment and expand when the time comes.

The UAE, in particular, is in a strong position to counter talent shortages. According to a 2024 global survey by BCG, Dubai and Abu Dhabi are now ranked the 3rd and 4th most desirable cities to live and work in globally, with the country itself ranked 14th. Low tax, high salaries, safety, and a high quality of life are drawing skilled professionals from across the wider Middle East and South Asia.

The Gulf’s next growth chapter

The GCC’s economic landscape is changing fast, and permanently. While oil will continue to play a strategic role, the region’s long-term growth story will be written in smart logistics, clean tech, fintech, and culturally rooted sectors like tourism and Islamic finance. For businesses and investors, the Gulf offers not just incentives, but a front-row seat to one of the most ambitious economic transformation stories in the world.