Much has been said about the growth of the Middle Eastern market for exports over the last 10-15 years. It's a market in which opportunities have ballooned for UK businesses looking to trade internationally.
UK exports to the United Arab Emirates alone have jumped a staggering 171% over the last 20 years, according to ONS data. A country which received huge investment and become increasingly globalised over the period.
But plenty of other markets in the region offer exciting opportunities across a range of sectors, including but certainly not limited to, food and drink, automotive, publishing and sustainable goods.
Read on to find out why now is the time for UK exporters to explore the Middle Eastern market.
More nations in the region becoming globalised
What makes the Middle Eastern market so exciting now, is the multitude of countries adopting a more globalised approach. Particularly those within the Gulf Cooperation Council (GCC). It's no longer just UAE driving exports to the region. In fact, Saudi Arabia and Qatar are two other markets looking to welcome more tourists, expats and improve their perception on the world stage.
Expats, drawn in by the career prospects and low tax rates will be keen to spend some of that extra disposable income on home comforts that UK businesses can lucratively provide. The increasingly globalised outlook will inevitably spike demand for high quality British produce from locals too.
The food service and hospitality inward investment figures for Saudi are really impressive. When you look at population and GDP in comparison to UAE, then there are some great opportunities there... also alongside Qatar.
Andrew Williams, Head of Food & Drink Sector, Santander UK
GDP of selected GCC countries in 2023 ($bn)
Source: World Bank
No doubt, the UAE still comfortably leads the way for UK exporters in terms of globalisation and infrastructure for exporters right now. But as you can see above, there are emerging opportunities in neighbouring countries, which could really amplify demand for British business in the coming decade.
Strong economic growth and high purchasing power
The Middle East, particularly the Gulf Cooperation Council (GCC) countries, boast strong economic growth forecasts in the coming years, driven by increasingly diverse economies and strategic investments.
The International Monetary Fund (IMF) projects that the GCC economies will grow at an average rate of 4.1% in 2025, after an uneven recovery from Covid-19. This economic growth translates into higher purchasing power and increased consumer spending.
For instance, the UAE and Saudi Arabia have some of the highest GDP per capita in the region, indicating strong purchasing power among residents. This creates a good prospect for UK businesses to introduce their products to a market which is ready and able to spend.
Moreover, investment from Middle Eastern countries into non-oil sectors such as tourism, healthcare, and technology further drives demand for diverse products. Countries like the UAE and Qatar have been investing heavily in other sectors to reduce their reliance on oil and create a more balanced economy.
This diversification opens up numerous opportunities for UK businesses across various sectors, from food and drink, healthcare innovations to educational technologies, luxury goods and much more.
Growing diversification index of GCC economies 2000 vs 2021
A multi-dimensional index which quantifies diversification across three angles: trade, output and revenue. Source: Global Economic Diversification Index 2023
Brexit complexity and strategic location
The reality of Brexit is increasing complexity for UK exporters to the EU market. Certifications and requirements remain difficult to negotiate, particularly when grasp of English isn't so strong in some major EU countries.
Due to this loss in trade, some businesses are looking elsewhere for markets which can compensate for the loss in trade and geographically, the Middle East makes the most sense.
"Many exporters are considering other markets. The Gulf is quite easy to access and there is a great demand for UK products and brands. It's ripe for UK food and drink manufacturers."
Andrew Williams, Head of Food & Drink Sector, Santander UK
Added to this strategic location, is the availability of outstanding infrastructure. State-of-the-art ports and airports, facilitate efficient transportation of goods.
Dubai, for example, is home to Jebel Ali Port, the largest in the Middle East. It handled over 14.5 million teus in 2023, indicating regular service calls from major shipping lines. Coupling that with the strong infrastructure and it ensures that goods from the UK can be transported quickly and efficiently to and from the Middle East.
UK and GCC negotiations over a free trade deal
The UK and Gulf Cooperation Council are currently in negotiations over a free trade deal. These agreements are designed to eliminate barriers and create a more favourable trading environment for UK businesses. The last round of negotiations was held in February 2024, where both sides said good progress had been made.
What the new Labour government's position on a free trade deal with the GCC will be is unclear at present. But the Conservative government, led by Rishi Sunak was very keen on a deal, stating that, "both sides remain committed to securing an ambitious, comprehensive and modern agreement fit for the 21st century."
Trade between the UK and GCC nations is said to be worth £59 billion per year.
"A free trade deal between the UK and GCC would be a real breakthrough. Earlier this year was the 6th round of talks between the UK and the GCC, which sounds like a lot but it really isn't. There's so many facets to a trade deal between nations it's not unusual for their to be a double-figures number of talks between the parties. Both sides have said negotiations are progressing well, so that's the important thing.
Jamie Craig, Customs Consultant, WTA
Favourable business environment and tax incentives
Many Middle Eastern countries have made significant strides in creating a favourable business environment to attract foreign investment. In the UAE, for example, as of 2020 the government has implemented a range of business-friendly policies, including the introduction of 100% foreign ownership. We're also seeing tax incentives, and streamlined business registration processes for many sectors.
These measures make it easier for UK businesses to establish operations and navigate regulations in the region.
"The UAE has established an extremely pro-business agenda in recent years and all the indications are that is only going to continue. Trade continues to be liberalised, and other countries in the region are following suit."
Nehal Ahmad, CSM, WTA UAE
Additionally, various free zones across the Middle East offer attractive incentives for foreign companies. These zones provide benefits such as tax exemptions, full repatriation of profits, and simplified customs procedures.
For example, Dubai’s Jebel Ali Free Zone (JAFZA) is the world's largest free trade zone, hosting over 10,000 companies from 150+ countries. By setting up in these free zones, UK businesses can benefit from reduced operational costs and increased competitiveness.
Young and technology-savvy population
If your goods are targeted towards younger people, then the Middle East could be a golden opportunity.
The Middle East is home to a young, tech-savvy population that is rapidly embracing digital technologies. The median age of the Middle East and North Africa region is just 26.8 years old. That compares with over 40 for the UK. This youth is driving a digital transformation which is creating demand for innovative products and services. It's a demographic which is highly receptive to new technologies and has a strong preference for e-commerce.
Furthermore, the high internet penetration rate in the region supports this trend. The UAE is one of very few countries to achieve an internet penetration rate of 100%.
Widespread connectivity facilitates online shopping and digital marketing, making it easier for UK businesses to reach and engage with their target audience. Leveraging clever digital marketing strategies, UK exporters can successfully tap into the UAE market, in a way which isn't possible with other nations.
Internet penetration in selected GCC countries
Source: Digital Marketing Community
Legislative requirements not as challenging as you expect
This point is particularly for food and drink exporters, or those industries which face greater regulatory hurdles. Products in these industries benefit from a strong reputation in terms of safety standards on the world stage, including in the Middle East.
This means there are less legislative hurdles than expected to jump over when looking at a market such as the Middle East. The high standards in place already are likely to be sufficient for this part of the world. UK brands are trusted.
However, that doesn't mean legislatively there wouldn't be challenges. Of course, there are restrictions on the sale of alcohol in the Gulf market. Some exporters are doing well in this space though, as rules are relaxed. There are also Halal requirements for Products of Animal Origin.
Packaging is another area to be wary of. April 2022 saw the introduction of a tax in the UK for any packaging which does not contain at least 30% recycling plastics. Similar rules could follow suit for the Middle Eastern market which is increasingly focused on sustainability. In the last few years, the UAE has phased out free single-use plastic bags. Following a similar move made by the UK in 2015.
"There's real concern I think about the plastic packaging tax coming in very shortly and many manufacturers are adapting supplies where they can.
Consumer expectations are also high in international markets. We've seen examples of buyers really liking the product, but the packaging needs further development to meet current and future recyclable or biodegradable standards."
Andrew Williams, Head of Food & Drink Sector, Santander UK
The way that the Middle East is bouncing back after Covid-19 restrictions is cause for real excitement. For so many reasons, exporters have a really good opportunity over the next 10 years to capitalise on the market.
UAE have sent the benchmark over the last 15 years, turning itself into a hugely significant location on the world stage. It is now a hub for international transport and a huge tourist destination.
Other countries in the region have seen the success and wealth that has been achieved and want a piece of that pie. There has never been a better time to look at the Middle East as an export opportunity.
I think all the markets, not just Saudi and Qatar, have something to offer. I would regard it as a positive opportunity for the next 10 years for UK businesses.
Andrew Williams, Head of Food & Drink Sector, Santander UK
Middle Eastern exports is a specialism of WTA. With our Dubai office, you have the benefit of local market knowledge in the region, which can prove vital in the success of your export journey. Reach out today.
