UAE economic performance surpasses expectations amid investment in new sectors

Development of emerging industries is paramount to the UAE's sustainable economic growth and diversification, Minister of Economy says

Abdulla bin Touq, Minister of Economy, said the UAE has taken the lead on sustainable finance and climate stewardship globally. Khushnum Bhandari / The National

The recent economic performance of the UAE has surpassed expectations despite rising global and regional uncertainty.

This is testament to the country’s economic resilience as it continues to push for diversification and investment in new sectors and industries to maintain growth momentum, Abdulla bin Touq, Minister of Economy, said.

The UAE, the Arab world’s second-largest economy, has taken the lead on sustainable finance and climate stewardship globally and will continue to invest in developing key components that will shape the future growth of the country, the minister told delegates at the Abu Dhabi Finance Week on Monday.

“Investments in new economic sectors and emerging industry is paramount to the UAE economic [development], its sustainable economic growth and diversification,” Mr bin Touq said in his keynote address at The Abu Dhabi Global Market.

“We recognise the transformative power of innovation, technology and forward-thinking industries and shaping our nation's future. The UAE has made significant strides in that direction and our investments in sectors such as renewables, artificial intelligence, biotechnology and manufacturing have been robust.”

The UAE achieved 3.7 per cent gross domestic product expansion in the first six months of this year, the highest rate of GDP growth in GCC, driven by a “remarkable” 5.9 per cent expansion in its non-oil economy, the minister said.

The non-oil sector accounts for about 70 per cent of the UAE economy, a testament to the success of the country diversification efforts.

The robust growth of the UAE’s tourism sector, coupled with a focus on developing the country’s industrial base through initiatives such as the Operation 300 Billion and the Abu Dhabi Industrial Strategy have helped in maintaining strong non-oil economic growth momentum.

That momentum will continue during the remainder of the year, driven by the UN climate summit Cop28 taking pace in Dubai, he said.

The country has taken the lead in sustainable finance and responsible investments as the UAE recognises its importance as it is “no longer a nice concept, it is the new kid on the block”, Mr bin Touq said.

“Our government truly believes in it, and we are committed to creating a conducive environment for responsible investment in the UAE and we have the ambition of becoming a global hub for green finance,” the minister said.

“We understand that sustainable finance and responsible investments are essential components of the global financial landscape.”

The country has already taken “significant strides” and has launched various initiatives and partnerships aimed at promoting green finance and environmental, social, and governance principles as well as setting its own ambitious spending targets.

Mariam Al Mheiri, Minister of Climate Change and Environment, at Abu Dhabi Finance Week. Khushnum Bhandari / The National

“We aim to create not just wealth, but wealth based upon a foundation of sustainability and environmental stewardship, and our plan to invest more than $160 billion in the next three decades in areas such as renewables, circular economy, smart transport, sustainable aviation and shipping, hydrogen and energy efficiency is a testament to our commitment,” Mr bin Touq said.

This week, more than 70,000 people from around the world will converge in Dubai to participate in the climate summit Cop28. Global thought leaders, officials, finance leaders, corporate bosses, and policymakers from 200 countries will try to tackle the escalating climate emergency amid geopolitical tensions from Ukraine to Gaza.

The UAE has become a “valued vocal and trusted voice making the case to our partners for a multi-dimensional response to climate change,” Mariam Al Mheiri, Minister of Climate Change and Environment, told the conference.

“Our position is pro-climate, pro-growth. We believe that climate action is good for growth," she told delegates.

“Reaching net zero maximum by 2050, is the pathway that the UAE is going along this is the pathway that we see will create new industries, will attract new partners, new technologies, new jobs, and so put simply, climate action makes good business sense.”

That point of view is “increasingly gaining traction” not only here in the UAE, but across the Mena region and being embraced by our partners beyond the region, she said.

Availability of climate financing is a critical component of talks at Cop28 as “we must deliver on our old promises and set the framework for a new deal on finance,” she said.

“Finance is the critical enabler for climate action, but to unleash its power, it has to be available, accessible and affordable to developing countries as well as the developed world.

Although the world needs in excess of $2.4 trillion of annual investment in climate action by 2030 to achieve net zero goals, the current international financial architecture is “fragmented and offers insufficient solutions particularly for those who need transformation the most”, the minister said.

“At Cop28, we want to kick start the process of this change. We want to help create a system where climate finance arrangements deliver at scale required and support finance mobilisation directed to developing countries at unprecedented levels. And to make progress, we must first address the long-standing commitments that risk undermining trust in the process."