UAE: The New Industrial Strategy to Refresh the Economy

The United Arab Emirates’ GDP should grow by around 3.5 percent this year, as expected by the IMF, which is far below pre-Covid growth rates. The UAE’s government is aware of the disproportionate dependence of the economy on the mining industry and oil prices. Therefore, at the end of last June, it presented a revised industrial strategy. As part of it, it plans to invest tens of billions of dollars in the development of the manufacturing industry. The strategy aims to double this industrial sector by 2031.

Oil and gas production accounts for up to 30 percent of the United Arab Emirates’ GDP and 13 percent of the country’s exports. The driving forces of the UAE economy are the emirates of Abu Dhabi and Dubai, which are also the most well-known.

But while Dubai has about 2.5 times more people than Abu Dhabi, Abu Dhabi’s economy is about 2.5 times larger than Dubai’s. Abu Dhabi’s economy is based on mining (almost 40% of GDP), Dubai’s economy is based on business and tourism (mining is only about 1 percent of GDP).

Although smaller, the Dubai economy is more resilient to commodities’ volatility due to its business diversity. Investors from various non-oil segments praise the famous emirate. “Our decision to establish a branch in Dubai continues to pay off. The business environment in the UAE, particularly in Dubai, remains favorable for growth. The country’s supportive infrastructure and regulations have facilitated our expansion efforts, and we have seen positive results in terms of clientele and business development,” Shadiq Zameen of Golden Brokers, one of the leading investment companies in Asia, said in an interview for FX Empire.

The government strategy will support six specific programs that will lead to the creation of about 13.5 thousand highly qualified jobs with the aim of supporting the growth of non-mining industries, including increasing the export of manufacturing products by more than 140 percent.

Last year, the government announced several development projects with an investment of $23 billion to significantly boost construction and allied activities and create job opportunities. These include the railway network project under Etihad Rail’s supervision of AED40 billion ($11 billion) by 2024, the construction of the Dubai urban tech district by 2024, and the expansion of the Rashid solar park capacity by 2025.

“Abu Dhabi’s blueprint for a comprehensive industrial strategy is an ambitious vision that will guide the future of the emirate’s manufacturing sector, and shape a resilient and diversified economy for decades to come,” said Mohammed Ali Al Shorafa, chairman of the Abu Dhabi Department of Economic Development (ADDED), to Arabianbusiness.com.

The department has also signed several industry partnerships including one that focuses on strengthening workforce capabilities, particularly through the adoption of Industry 4.0 technologies and innovation.