The UAE’s economy is projected to witness a substantial 5% growth this year, largely propelled by the dynamic expansion of its non-oil sector and a surge in foreign direct investment (FDI), according to the Minister of Economy, Abdulla bin Touq. In an interview with state news agency Wam, the Minister highlighted this growth as a pivotal milestone, with the non-oil economy now representing an unprecedented 73% of the UAE’s gross domestic product (GDP).
This significant shift in the economic landscape marks a historic first for the UAE, the Arab world’s second-largest economy, underscoring the growing confidence of the private sector and global investors in the nation’s investment environment. The Minister’s announcement comes as the UAE continues to successfully rebound from the slowdown caused by the Covid-19 pandemic, with the economy expanding by 7.9% in 2022, reaching its highest growth rate in 11 years.
The first half of 2023 saw the UAE’s economy grow by 3.7% annually, driven predominantly by a robust 5.9% increase in the non-oil sector, despite global and regional uncertainties. While these figures for the first half of the year might appear modest compared to 2022’s surge, they are still significant, reflecting the nation’s steadfast commitment to economic diversification and resilience.
While full-year GDP growth figures for 2023 are still pending from the Federal Centre for Competitiveness and Statistics, the Minister had previously forecast a 3.6% GDP growth for the year. The upcoming three-day Investopia annual conference in Abu Dhabi, starting February 28, is set to further discuss these developments and the future economic trajectory of the UAE.
The sustained economic momentum into 2023 is expected to be bolstered by the UAE’s strategic measures to fortify its economic resilience in the face of global challenges such as high inflation, monetary policy uncertainties, and a slowdown in global economic growth. The UAE’s ambitious Operation 300bn strategy aims to transform the country into a global industrial hub by 2031, increasing the industrial sector’s contribution to the GDP from Dh133 billion in 2021 to Dh300 billion by 2031.
In 2022, the UAE achieved 30% of this strategy’s target, with the industrial sector’s contribution to the GDP reaching Dh197 billion. The government’s focus remains on attracting FDI in key sectors such as healthcare, life sciences, advanced manufacturing, artificial intelligence, and robotics. This approach aligns with the UAE’s identification of the most sustainable and flexible economic sectors for growth, which includes health technology, agriculture, education, and financial services, thereby contributing to the overall sustainability and strength of the national economy.
