For decades, Pakistan’s economic relationship with the Gulf has been framed in terms of labour migration and oil dependence. The six Gulf Cooperation Council (GCC) states—Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain, and Oman- remain both indispensable and lopsided partners. Trade has grown dramatically, leaping from US $2.75 billion in 2000 to US $22.6 billion in FY 2024-25 (July-May period), an almost eightfold increase that outpaces Pakistan’s trade expansion elsewhere. Yet the arithmetic tells a harsher story that a structural trade deficit of nearly $12.4 billion in the same period, fuelled overwhelmingly by energy imports, now hangs over the relationship.

“Pakistan ships labour and low-value goods to the Gulf, and in return imports the fuels that keep its economy running.”

The scale of dependence is striking. Over sixty per cent of Pakistan’s imports from the GCC are crude oil, petroleum products and natural gas. The UAE alone accounts for nearly 40 per cent of all Pakistan-GCC trade, but leaves Islamabad nursing a deficit of more than US $5.9 billion. The broader Middle East (GCC‑inclusive) deficit remains noteworthy, US $5.514 billion, even in just the first five months of FY 2024–25. What Pakistan earns by exporting textiles, rice or surgical goods is swallowed up by the oil bill. In effect, Pakistan ships labour and low-value goods to the Gulf, and in return imports the fuels that keep its economy running.

Remittances complicate the picture. The 6.1 million Pakistanis who live and work in the Gulf remit a sizeable amount of foreign exchange. According to the State Bank of Pakistan (as reported by Arab News), Pakistan received approximately US $20.88 billion in remittances from Gulf countries during the fiscal year 2024-25. This is equivalent to 5.1 per cent of GDP. Without this steady inflow, Pakistan’s balance of payments would be unsustainable. Yet remittances are a lifeline, not a growth strategy. They keep the current account afloat but do little to build long-term competitiveness or technological capacity.

The real question, then, is whether Pakistan can shift this relationship from dependence to reciprocity. The evidence suggests it can, if it is willing to move beyond traditional export patterns. The policy brief underpinning this debate identifies $16.3 billion in untapped export potential, concentrated in six sectors that are already competitive but underexploited.

Information technology services stand out as the most promising. Pakistan’s IT exports to the GCC are minimal, yet the gulf region imported US $141 billion worth of ICT and digital services in 2025. With a workforce of more than 600,000 IT professionals and a thriving fintech ecosystem, Pakistan has both the scale and the price advantage to compete. Engineering and construction services form another area of synergy. Pakistani firms and workers are already embedded in the Gulf’s infrastructure boom, but exports remain limited against a market opportunity of more than three times that.

“Remittances are a lifeline, not a growth strategy.”

Pharmaceuticals, processed foods, marble, and sports goods together represent a further $8 billion in potential gains. Pakistan’s pharmaceutical industry, with WHO-certified facilities and proven cost competitiveness, could tap into the Gulf’s demand for affordable generics. The country’s rich culinary base and halal certification system make it a natural supplier of processed foods to a region where demand for ready-to-eat halal products is surging. Even marble and sports goods, sectors often relegated to the margins, have strong prospects, with GCC construction projects and sporting culture offering lucrative openings.

Yet potential is nothing without institutional scaffolding. Pakistan’s exporters face high barriers to market entry: inconsistent quality standards, protracted certification processes, and limited state support. For a country whose exporters are often small and undercapitalised, the absence of facilitation can be fatal. The proposed remedies are both practical and urgent: establishing a GCC Trade Facilitation Unit in the Ministry of Commerce, creating single-window clearance for exports, and aligning Pakistan’s quality standards with those of Gulf regulators. These may sound technocratic, but their impact would be transformative.

Trade diplomacy must also be re-energised. Negotiations on a Comprehensive Economic Partnership Agreement with the UAE, alongside efforts to secure a GCC-wide free trade agreement, should not be allowed to languish. Tariff reductions of even 15 to 20 per cent could shift the balance of competitiveness in Pakistan’s favour. Coupled with an investment fund seeded by both sides, Islamic banking corridors to ease trade finance, and skill-development programmes tailored for Gulf markets, the scope for deeper economic integration is clear.

What would success look like? By 2030, bilateral trade between Pakistan and the GCC could range from US $27 billion under a low-growth path to as high as US $40 billion if the FTA delivers and reforms take hold. In the more optimistic scenarios, Pakistan’s exports could realistically double to around US $10-12 billion, while the trade deficit could be cut nearly in half. That shift would open space for new jobs in services, agriculture, and IT, expand high-skilled opportunities, and anchor the relationship on a more sustainable economic footing.

“Pakistan’s exporters face high barriers to entry, quality standards, certification, and limited state support.”

The risks are not negligible. Regional geopolitics could once again destabilise trade ties, as could global downturns that sap Gulf demand for imports. Competitors, India, Bangladesh, and even Turkey, are also vying for the same markets. Pakistan’s greatest weakness, however, is often its own institutional inertia. Without coordinated implementation, even the most carefully drafted policy brief risks gathering dust.

The larger prize is not merely commercial but strategic. A recalibrated partnership with the GCC would position Pakistan as a preferred trade partner in a region that is actively diversifying its economies and supply chains. It would reduce dependence on remittances and oil imports, while anchoring growth in sectors that build skills, technology and resilience. In a global economy where trade wars and supply disruptions are the new normal, such diversification is more than desirable, it is imperative.

The window of opportunity is finite. The Gulf states are racing ahead with their own diversification plans under the banners of Vision 2030 and beyond. If Pakistan fails to seize its share, others will fill the gap. For Islamabad, the choice is stark: remain an importer of fuels and exporter of labour, or become a full participant in the Gulf’s new economic geography. The numbers suggest the second path is possible. The political will to pursue it remains the open question.

Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.