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Service Sector in the GCC Countries

According to macroeconomic sector theory, the economy is typically categorized into three primary sectors: The first involves the extraction of raw materials, encompassing industries like mining, timber, oil exploration, as well as agro-industries and fisheries. The second sector involves the production and sale of goods, including industries such as automotive manufacturing, furniture, and clothing trade. Conversely, the third sector, known as the “service” sector, focuses on providing intangible services, such as entertainment, healthcare, transportation, hospitality, and restaurants. As countries progress, their economies tend to shift towards greater reliance on the service sector, in contrast to less developed countries where the primary sector predominates. For instance, in the United States, the service sector accounts for 85% of its economy.

The Kingdom of Saudi Arabia:

• If we take a closer look in the activities of the service sector, we will notice that it is a large sector; as it includes: wholesale and retail trade, restaurants, hotels, transportation, storage, information and communications, financial and insurance services, real estate and business services, community, social, and personal services, and finally, government services. The sector most significant indicators in the KSA are as follows:
• The service sector accounts for approximately 48.2% of the Saudi GDP.
• Wholesale, retail, restaurants and hotels contribute 10.8% to GDP.
• Transportation, storage, information and communications contribute 6.6% to GDP.
• Financial, insurance, real estate and business services contribute 6.4% to GDP.
• Community, social and personal services contribute 2.5% to GDP.
• Government services contribute 21.9% to GDP.
• According to the latest statistics, the Kingdom of Saudi Arabia issued 100,944 new business licenses in the previous year; thus, the total number of the issued business licenses is 348,173. Wholesale and retail trade, motor vehicle, and motorcycle repair accounted for the majority of new licenses issued, totaling 48,242 licenses. Subsequently, accommodation and food services activities followed with 16,531 licenses, while construction activities ranked third with 11,521 licenses.

Qatar:

• Qatar’s wholesale and retail trade is valued at QAR 50,083 million.
• The number of facilities operating in wholesale and retail trade reaches 11,139, with a total of 213,954 workers employed in these facilities.
• Wholesale and retail workers’ compensations reached QAR 11,288,877 thousand.
• The facilities operating in the hotel and restaurant field reach 2396. The number of workers in these facilities reached 78,194.
• Hotel and restaurant workers’ compensations reached QAR 2,947,431thousand.
• The number of mobile phone subscribers in Qatar (regular subscription) is 976,015.
• The number of mobile phone subscribers (prepaid service) is 2,941,556.
• The total length of roads paved in the previous year in Qatar is 2224 kilometers.
• The number of the driving licenses issued in the previous year is 242,923 licenses.
• Transportation and communications workers’ compensations reached QAR 24,338,223 thousand.
• The number of insurance policies issued in Qatar in the previous year is 715,897 policies.
• The number of facilities operating in business services reaches 4,973.
• The number of workers in business services reaches 215,285.
• Business services workers’ compensations reached QAR 15,347,819 thousand.
• The number of social and personal services workers reaches 80,569 in the private sector.
• Social and personal services workers’ compensations are estimated at QAR 6,127,645 thousand.

Kuwait: 

• Wholesale and retail trade contributes approximately KWD 1,644.3 million to the country GDP.
• Restaurants and hotels contribute approximately KWD 418.6 million to the country GDP.
• Transportation, storage and communications contribute approximately KWD 2,554.5 million to the country GDP.
• The total length of roads paved in Kuwait is 91,340,068 sqm.

The United Arab Emirates:

• Wholesale and retail trade, motor vehicle, and motorcycle repair contribute 12.3% to GDP (AED 172,288 million).
• Transport and storage activity contributes 5.9% to GDP (AED 82,461 million).
• Accommodation and food services contribute 2.3% to GDP (AED 32,357 million).
• Information and communications activity contributes 2.9% to GDP (AED 41,347 million).
• Insurance activities contribute 9.6% to GDP (AED 134,773 million).
• The number of insurance policies issued the previous year is 7,584,607 policies.
• Wholesale and retail trade account for 13% of the UAE total workforce.
• Transport and storage account for 6.2% of the country total workforce.  Approximately 5% of the total workforce is engaged in the accommodation and food services.

Oman:

• The GDP of the Sultanate is RO 29.3 billion.
• Wholesale and retail trade contribute 7% to GDP, with RO 2,064.7 million.
• Restaurants and hotels contribute 1.1% to GDP, with RO 308.6 million.
• Transportation, storage and communications contribute 5.9% to GDP, with RO 1,721.2 million.

The Global Service Sector

 The service sector is the major contributor to the global GDP; it alone accounts for more than three fifths of this GDP. The sector does not rely on producing tangible goods such as vehicles and furniture, but rather on providing intangible services such as banking, medical care, transportation, hospitality, entertainment, etc. The value of the sector market was estimated in 2020 at USD 10,814.49 billion and rose to USD 11,780.11 billion in 2021. Therefore, the market achieved a CAGR of 8.9%. After recovering from the effects of the corona virus pandemic, global market experts expect the sector market to reach USD15683.84 billion by 2025, bringing the market to a CAGR of 7% in the coming years.