UAE Economic Diversification: 47% Increase in Non-Oil Exports

UAE Economic Diversification: 47% Increase in Non-Oil Exports

Since the discovery of immense oil and gas fields and the founding of the Federation, the economy of the United Arab Emirates (UAE), like its Gulf neighbours, has been primarily based on the exploitation and export of fossil fuels. While oil and gas output had contributed some 30% to the country’s GDP, this trend is changing. 

The numerous fluctuations in commodity prices make the oil industry a fragile and unpredictable one, acutely demonstrated by the historic drop in oil prices during the COVID-19 pandemic. Furthermore, climate change and the international effort to prevent its adverse effects have also prompted many countries to adopt policies aimed at reducing the share of fossil fuels in the world’s economy and energy mix. 

Since the 1980s, the government of the UAE has sought to promote industrial development with the aim of diversifying the economy away from oil and has launched multiple initiatives and national programmes to achieve this objective.

Since then, the UAE has made significant industrial gains. In 2016, the UAE was the second largest exporter of manufactured goods among the economies of the Gulf Cooperation Council (GCC), behind Bahrain, owing notably to an increase in aluminum smelting and fertilizer production

The UAE has also demonstrated its determination to maintain momentum by unveiling the Abu Dhabi Economic Vision 2030, which set the target of a 7.5% growth annually in non-oil industries. According to the latest data, the COVID-19 pandemic has had little impact on this ambitious programme. Last week, during a cabinet session held in Abu Dhabi to assess the results of the COVID-19 recovery plan, Sheikh Mohammed bin Rashid Al Maktoum, Ruler of Dubai, UAE Vice President, and Prime Minister, announced that non-oil exports have increased by 47% compared to pre-pandemic levels

The Emirati vision also appears to have the wind in its sails abroad as the level of foreign direct investments has increased by 16% compared to 2019 and the number of new businesses registered in the Federation has grown by 126%. These results have largely contributed to the 3.8% growth in GDP recorded in 2021, thereby exceeding international projections by 1.7%. Non-oil GDP grew by 5.3% in 2021. 

To further build on these gains, the government has launched several initiatives to encourage entrepreneurship among youth and government employees. The cultural and creative industries have also grown over the past year with a 3.5% contribution to GDP.

Abu Dhabi is also looking to place the health and space industries among the main drivers of its economic diversification. The results of the past few years tend to indicate that the UAE’s economic diversification strategy is already bearing the fruit of success. 

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