The GCC nations, known for strategic positioning, economic stability, and abundant oil reserves, play a significant role in global commerce. Prioritizing diversification and innovation, they recently signed a free trade agreement with South Korea, the second major pact after the one with Pakistan in September. This strengthens economic ties between the GCC and these Asian partners.
This economic bridge aims to enhance bilateral trade and diversify the economies of both regions. South Korea, a tech and manufacturing giant, brings access to new markets and advanced technologies for the resource-rich Gulf states. In return, the GCC offers Seoul a gateway to a lucrative energy and consumer market.
The agreement was coined a “historic step towards achieving Gulf economic integration and towards strengthening economic and trade relations between the two sides”, by GCC Secretary General Jasem Al Budaiwi.
“The signing of free trade agreements with both Pakistan and South Korea, within a period of three months … takes into account the wonderful economic position that the GCC countries have reached,” Mr Al Budaiwi said.
Diversification efforts are prominent as the GCC’s oil and non-oil sectors recover from the pandemic, with anticipated accelerated growth in the next two years. The World Bank forecasts regional growth at 1% in 2023, followed by a surge to 3.6% and 3.7% in 2024 and 2025.
In pursuit of diversification, GCC nations are actively establishing new global trade and economic partnerships. The UAE, a key economic player, aims for $1.09 trillion in foreign trade by 2031 and plans to double its economy by 2030. As part of this strategy, the country has signed 26 Comprehensive Economic Partnership Agreements to attract heightened investment.
The UAE, South Korea’s second-largest Arab trade partner, maintained bilateral non-oil trade at $3 billion in the first half of 2023, highlighting the potential of the recent pact between the two nations.
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