The UAE economy expanded by 3.7 per cent annually in the first half of the year, driven by strong non-oil sector growth as the country continues to pursue its diversification goals, Minister of Economy Abdulla bin Touq has said.
While the first-half rate of economic growth “may seem modest” compared with last year, it is still “robust growth against the backdrop of global and regional uncertainty”, Mr bin Touq told the AIM summit in Dubai on Monday.
The non-oil sector's “staggering” 5.9 per cent growth in the first six months of the year is “even better news”, as it accounts for about 71 per cent of gross domestic product, illustrating the success of the UAE’s diversification initiatives, he said.
“The UAE’s economic growth is a testament to our resilience, diversification and commitment to openness and international co-operation,” Mr bin Touq said.
“As we look ahead, we are more determined than ever to build a sustainable and inclusive economy. Our policy and initiatives are firmly anchored in a vision of prosperity for people and a thriving business environment and the leadership role in global affairs.”
Non-oil GDP in the Arab world's second-largest economy rose by 4.5 per cent on an annual basis to Dh312 billion ($84.9 billion) for the January-March period.
The country's economy rebounded strongly last year from the slowdown caused by Covid-19, growing by 7.9 per cent in 2022, the most in 11 years, to Dh1.62 trillion at constant prices.
The resurgence came on the back of higher oil prices and government measures to mitigate the impact of the pandemic.
The UAE's economy grew by 3.8 per cent on an annual basis in the first quarter of this year to Dh418.3 billion ($113.9 billion), from Dh403.3 billion a year ago, Mr bin Touq said in August, quoting preliminary estimates from the Federal Centre for Competitiveness and Statistics.
Economic growth momentum is expected to continue for the second half of the year, with the UAE's GDP estimated to expand by 3.6 per cent in 2023, he said.
An array of measures adopted by the government have improved the resilience of the economy despite the challenges of inflation, monetary policy uncertainty and slowing global economic growth.
“These external factors have tested the resilience and adaptability of countries and economies worldwide, and have posed significant challenges to economies around the world,” Mr bin Touq said.
With growing public and private debt and the possibility of “some degree of financial instability” still present, policymakers globally are facing challenging times, he said.
“The policymakers are not facing a dilemma any more – the classic trade-off between growth and inflation. What they're facing is a 'trilemma' as they also have to worry about financial stability,” he said.
The geopolitical uncertainty in the region is another factor adding to global economic headwinds, "in a way amplifying all the challenges that existed, and they were already significant", Mohamed El-Erian, chief economic adviser at Allianz, told delegates on Monday.
"The longer this conflict [the Israel-Gaza war] goes on, the more likely it's going to escalate. The higher the risk of escalation, the higher the risk of contagion to the rest of the world in terms of economics and finance," Mr El-Erian said.
"The third thing to remember is that contagion would add to problems of economic growth to the inflation channels and to the fragmentation of the global economy."
The past decade has generally been difficult for the region, but the UAE has managed to find a way forward by being "very agile" and moving at a brisk pace in term of policy changes, Mr bin Touq said.
"We have changed about 15 laws in the last two years to show that agility in our markets," he said.
The UAE's economy has developed resilience through policy measures, including changes to commercial laws.
"We have changed in the last few years and have diversified a lot of things and we're going to keep on doing [that]," Mr bin Touq said.
"It'll take [some] time for our economy to really show these policies' impact."
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Other promotions
- Deliveroo will team up with Pineapple Express to offer customers near JLT a special treat: free banana caramel dessert with all orders on January 26
- Jones the Grocer will have their limited edition Australia Day menu available until the end of the month (January 31)
- Australian Vet in Abu Dhabi (with locations in Khalifa City A and Reem Island) will have a 15 per cent off all store items (excluding medications)
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
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Turkish Ladies
Various artists, Sony Music Turkey
UAE Falcons
Carly Lewis (captain), Emily Fensome, Kelly Loy, Isabel Affley, Jessica Cronin, Jemma Eley, Jenna Guy, Kate Lewis, Megan Polley, Charlie Preston, Becki Quigley and Sophie Siffre. Deb Jones and Lucia Sdao – coach and assistant coach.
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Avatar: Fire and Ash
Director: James Cameron
Starring: Sam Worthington, Sigourney Weaver, Zoe Saldana
Rating: 4.5/5
MATCH INFO
Fixture: Thailand v UAE, Tuesday, 4pm (UAE)
TV: Abu Dhabi Sports
