Economy to expand 5% this year on robust non-oil growth momentum, minister says

The UAE economy is estimated to expand by 5 per cent this year, driven by a robust growth in the country’s non-oil sector and increase in foreign direct investment.

The non-oil economy currently accounts for 73 per cent of the UAE’s gross domestic product, which is a “historic first for the country”, Minister of Economy Abdulla bin Touq told state news agency Wam yesterday.

This “reflects the confidence of the private sector and investors around the world in the UAE’s investment environment”, Mr bin Touq said.

The UAE economy rebounded strongly from the slowdown caused by Covid-19, expanding by 7.9 per cent in 2022, the most in 11 years, to Dh1.62 trillion ($441 billion) and has since maintained a robust growth momentum.

It climbed 3.7 per cent annually in the first half of 2023, as the country continued to pursue its diversification goals, Mr bin Touq said in October.

While the first-half rate of economic growth “may seem modest” compared with last year, it was still “robust” given the global and regional uncertainties, driven by “staggering” 5.9 per cent growth in the country’s non-oil sector, he said at the time.

The Federal Centre for Competitiveness and Statistics has yet to release 2023 full-year GDP growth figures.

Mr bin Touq in August said he expected the UAE’s GDP to expand by 3.6 per cent in 2023.

“The private sector is a key pillar in the new economic and investment landscape,” he said, ahead of the three-day Investopia annual conference, which began in Abu Dhabi yesterday. The sector “is at the heart of global changes and challenges”, he said.

The momentum is expected to continue this year on the back of measures adopted by the government to improve the country’s economic resilience amid high global inflation, monetary policy uncertainty and slowing global growth.

The UAE is pursuing its strategy, Operation 300 billion, to position the country as a manufacturing centre by 2031, increasing the industrial sector’s contribution to GDP to Dh300 billion by 2031, from Dh133 billion in 2021.

Last year, the UAE achieved 30 per cent of the strategy’s target, as the industrial sector’s contribution to GDP hit Dh197 billion.

The government is keen to boost FDI inflows, particularly in areas such as health care and life sciences, advanced manufacturing, artificial intelligence and robotics.

“The UAE has identified the most sustainable and flexible economic sectors [for growth] including health technology, agriculture, education, financial services, artificial intelligence,” Mr bin Touq said.

The growth momentum in these sectors was contributing to sustainability and enhancing the “strength of the national economy”, he said.