Saudi Arabia and the UAE

The WTO expects the Middle East’s export volume to grow at 3.8% in 2024.¹ This aligns with trends from the 2024 Trade in Transition survey as 57% of business executives in Saudi Arabia and the United Arab Emirates (UAE), the region’s largest economies, expect double-digit growth in exports in 2024, while 40% expect the same for imports.

Export growth is coupled with export diversification in both countries as the strategic visions of Saudi Arabia and the UAE are undergoing radical transformation to move away from fossil fuels and into diversified sectors, such as services.² The two economies will continue leveraging their growth in non-oil sectors and control over key logistics hubs to boost their opportunities in trade.

Despite this ambition, significant challenges for the trading environment remain. The conflict between Israel and Hamas is worsening supply-chain disruptions in the Red Sea, a key shipping route for Saudi and Emirati trade with Europe. This is putting upward pressure on shipping rates due to the necessary diversion of maritime routes.³

Expansion into new markets is taking place as Saudi Arabia and the UAE become integral to China and India’s global trade initiatives.

The two Gulf states, due to their geographical location, are seeking to consolidate their role as trading hubs, linking Asia with markets in Europe and Africa. Since early 2022, the UAE and Saudi Arabia have embarked on a major push to strengthen trade ties with partners outside the immediate Gulf region and to further integrate their economy with partners in Asia, Europe and Africa.

A third of surveyed business leaders in both countries (33%) believe that expanding operations into new markets will be the primary growth driver of exports from the two economies (see figure 1). Over the past year, the UAE has entered a trade offensive, signing bilateral trade agreements with partners across the world. For instance, the UAE signed a Comprehensive Economic Partnership Agreement (CEPA) with Georgia in 2023, potentially doubling non-oil trade between the two countries in five years.⁴ The deal presents opportunities for businesses on both sides operating in logistics, hospitality and financial services. The UAE is also negotiating similar agreements with South Korea, Thailand and Chile, and most recently with the Republic of the Congo. Similarly, Saudi Arabia is seeking to strengthen trade ties with China, in areas such as security and tech.⁵

Yet, dominant Asian economies such as China and India remain the most important trading partners for Saudi Arabia and the UAE outside the immediate GCC region. China and India are engaging with the two Gulf countries as part of their strategic efforts to extend their global influence, such as the Chinese Belt and Road Initiative (BRI) and the India-Middle East-Europe Corridor (IMEC).⁶ Combined with new trade agreements, such as the UAE and India CEPA agreement, such initiatives offer opportunities for the Saudi and UAE economies to further consolidate their positions as global trading hubs. These agreements also boost businesses in sectors such as construction, logistics and financial services in the Gulf region. There are also significant benefits in terms of transport and trade costs for businesses. BRI projects are estimated to decrease shipment times by 3.2% and trade costs by 2.8%.⁷ In our business leader survey, transport costs are mentioned as the second most important factor limiting export growth in 2024.

Expansion into new markets and deepening existing relationships will be key to continuing the UAE and Saudi Arabia’s growth trajectories. Engaging with a diverse range of partners across different geopolitical alignments will enable them to continue capitalising on their strategic geographic proximity to Asia, Europe and Africa.