UAE economy expected to grow by 5% this year, Minister of Economy says

Non-oil economy currently accounts for 73% of the Emirates' gross domestic product in 'historic first for the country', Abdulla bin Touq says

The Dubai International Financial Centre. The financial services sector is a pillar that has helped the UAE maintain robust economic growth momentum. Pawan Singh / The National
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The UAE economy is expected to grow by 5 per cent this year, driven by a robust expansion 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 on Wednesday.

That almost three quarters of the country’s economy, the Arab world’s second largest, is now driven by activities other than the hydrocarbons sector, is an achievement, which “reflects the confidence of the private sector and investors around the world in the UAE's investment environment", Mr bin Touq said.

The Emirates' economy rebounded strongly from the slowdown caused by Covid-19, growing by 7.9 per cent in 2022, the most in 11 years, to Dh1.62 trillion ($441 billion) at constant prices. It has maintained a robust growth momentum since.

It expanded by 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 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 on Wednesday ahead of the three-day Investopia annual conference, taking place in Abu Dhabi from February 28.

"It is at the heart of global changes and challenges.”

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 persistently high global inflation, monetary policy uncertainty and slowing global economic growth.

The UAE is pursuing its strategy, Operation 300bn, to position the country as an industrial centre by 2031, increasing the industrial sector’s contribution to GDP to Dh300bn 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,” the Minister told Wam.

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

Updated: February 28, 2024, 1:10 PM