Non-oil sector drives the UAE’s 3.7 percent economic growth

Boosted by its own 5.9 percent growth in the first six months of the year
Non-oil sector drives the UAE’s 3.7 percent economic growth
UAE has become less dependent on oil and more dependent on knowledge-based sectors

The UAE Minister of Economy His Excellency Abdullah bin Touq Al Marri stated on Wednesday, that the “UAE’s GDP grew 3.7 percent in the first half of the year, driven by the growth of the non-oil sector.”

UAE’s non-oil sector

During a business conference in Dubai, the minister said that “the non-oil sector grew 5.9 percent in the first six months of the year.” Al-Marri described the UAE’s economic growth as a testament to the country’s strength and diversity. He also highlighted its commitment to openness and international cooperation.

He added, “The UAE has become less dependent on oil and more dependent on knowledge-based sectors.”

The non-oil sector makes up more than 70 percent of the country’s gross domestic product.

Gulf states, whose revenues depend largely on oil and gas, are currently pursuing plans to diversify their economies. They are pursuing alternative sources of income and attracting foreign investment.

Notably, the UAE is among the countries that have made the most progress in this process. It has developed financial services, trade, and tourism, in addition to implementing social and trade reforms.

UAE economy growth expectations

Last year, the UAE economy recorded a growth of 7.9 percent, supported by a sudden rise in oil prices. Additionally, it rapidly recovered its tourism and trade sectors following the COVID-19 pandemic. That is especially true in Dubai, the region’s business and tourism hub.

However, growth is expected to slow down sharply across the region in 2023. OPEC+ members will be cutting oil production and oil prices are expected to decrease. Moreover, the global economy is struggling and facing multiple challenges.

The International Monetary Fund expects the UAE’s GDP to grow by 3.5% this year. The performance of Gulf Cooperation Council countries, due to the growth of their non-oil sectors, will exceed four percent.

However, the fund warned in a report that the outlook “remains vulnerable to increasing global uncertainty.”

Read: UAE petrol prices 40 percent cheaper than the global average

UAE Central Bank’s foreign assets

According to the UAE Central Bank, its total foreign assets jumped on an annual basis. By the end of August 2023, they recorded around a 34 percent increase.

The bank’s foreign assets increased to Dhs585.1 billion in August compared to about Dhs437.7 billion in August 2022. That is a Dhs147.4 billion increase.

The Central Bank’s foreign assets increased during the first eight months of this year by 18.5 percent reaching Dhs91.2 billion. That is compared to their value of about Dhs493.88 billion at the end of last year.

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