Together with Smart Investment Gateway (SIG) and the event’s host, the Oman Chamber of Commerce and Industry, KAS set out to examine the particularities of GCC economic growth and diversification over the course of a two-day workshop held in Muscat, Oman, from 17-18 February 2025. Mindful of the unique economic model espoused by the Gulf states and their far-reaching plans to reduce their reliance on hydrocarbons, the forum – titled “Economic Diversification in the Gulf States: Measuring change and the role of the private sector” – aimed to render KAS and SIG’s GCC Economic Diversification Barometer more precise and impactful, in addition to identifying how Germany and European countries can support the Gulf countries’ ambitious efforts.
On the workshop’s first day, a packed auditorium at the Crowne Plaza Muscat Hotel was treated to a keynote speech by Eng. Almutasam bin Ali bin Hamad Al-Yaqoubi, Director of the Omani Ministry of Economy’s National Programme for Economic Diversification, and a special address on the GCC Economic Diversification Barometer from Dr Yousuf Hamad Al Balushi, Founder and Managing Director of SIG. Next, two expert panels took stock of the Gulf states’ progress on diversification and placed these ambitions within the context of GCC countries’ positioning in international relations.
Across these discussions, the consensus was clear: “Diversification is not a choice,” as Jordan’s Former Energy and Mineral Resources Minister Dr Ibrahim Saif observed. Panellists also highlighted the far-reaching implications of diversification in the Gulf context, whose achievement entails not only the fundamental recalibration of the state’s role in the economy, but also the conclusion of new partnerships in international trade and investment. In this regard, Dr Mahmood Sakhi Albalushi, Chief Executive Officer of Al Madina Logistics and Bayanat Technology, highlighted that the GCC views itself as the centre of the world, connecting east and west, north and south. Following this logic, economic transformation in the Gulf also has profound implications for the economies of neighbouring countries around it.
Following the public panels of the first day, the workshop concluded on 18 February with a series of closed-door, expert roundtables on measuring economic growth and diversification in the GCC, with a view toward developing policy recommendations and proposals for strengthening the composite index of the KAS-SIG GCC Economic Diversification Barometer. From increasing the size of the proverbial economic pie to achieving greater rates of return on the liquidation of a finite asset – oil – participants proposed many metaphors to describe a central tenet of diversification: its intimate association with heightening productivity. Accordingly, the assembled experts agreed that the reform of government finances represents the most reliable measure of diversification in the economy as a whole. Specifically, the public accounts of the Gulf states can be placed on a more sustainable footing if more citizen services are funded through taxes and oil rents are increasingly invested in high-productivity sectors, as opposed to low-productivity government transfers.
The assembled experts also pointed to the composition of exports as an honest metric of progress on diversification. After all, diversified exports indicate the competitiveness of oil-adjacent products produced in the GCC, not only in the protected atmosphere of the domestic market, but also in the international arena. It is in this context that the paramount importance of unleashing the private sector becomes clear as well. In order to grow globally competitive industries, companies need access – not to the state, but to credit from banks. They also need to be allowed to fail, a mechanism that remains underdeveloped due to punitive bankruptcy laws and the political cost of giving up on certain state-owned projects.
Despite the enormity of the task they have undertaken, the workshop nonetheless concluded that the GCC states have taken promising initial steps in the direction of diversification. To maintain this progress, however, they must take care to dedicate their oil wealth towards productivity-boosting investments and establish the legal and financial environments necessary to foster the growth of a robust, diverse, internationally competitive private sector. Along the way, KAS and SIG’s GCC Economic Diversification Barometer will continue to accompany and assist these efforts through providing rigorous, data-driven insights into the Gulf states’ progress.
