How everyone benefits from the UAE’s growing non-oil economy

For many people, midway through the year is a good time to take stock, review progress and plan for the future. The same is true for countries and economies, making this week’s news that Abu Dhabi’s non-oil foreign trade in the first half of this year jumped 34.7 per cent annually to Dh195.4 billion ($53.2 billion) significant.

As the emirate’s non-oil economy continues to expand amid diversification drives and government initiatives, these latest figures reveal that a thriving, post-hydrocarbons UAE is no longer about near-future speculation; it is unfolding now. The reasons behind this are varied but they are not only of national interest – they have global relevance too.

One important driver of the UAE’s flourishing non-oil trade is the country’s economic relationships with an expanding list of partner states. By signing new trade deals, such as the more than two dozen Comprehensive Economic Partnership Agreements (Cepas) struck in recent years, the Emirates is opening new markets, boosting trade and investment flows, and removing tariffs.

The UAE’s growing domestic manufacturing base also plays an important role in building up the non-oil economy; in 2023 alone, Abu Dhabi’s industrial sector contributed to 16.5 per cent to the emirate’s non-oil gross domestic product and represented 51.3 per cent of the UAE’s manufacturing sector.

Similarly, the UAE’s growing relevance as an AI and technology hub gives it a critical role in the 21st-century global economy. Research from PricewaterhouseCoopers, one of the world’s largest professional services companies, predicts that AI alone will contribute close to 14 per cent of the UAE’s GDP by 2030. This aligns with the country’s National Artificial Intelligence Strategy, which aims to have the technology contribute 20 per cent to non-oil GDP by 2031.

None of this is to suggest that energy is taking a back seat, rather that the focus has changed. Energy is the engine of economic growth and hydrocarbons globally continue to play a vital role. Entities like XRG and the Emirates Nuclear Energy Company are leading the drive to ensure energy demands are met and sources are diversified.

But the country is also investing billions in renewable energy projects and technologies. Although the focus so far has largely been on reducing the country’s carbon footprint and ensuring a sustainable supply of domestic power in the future, the UAE looks set to become an important exporter of green energy. The country’s National Hydrogen Strategy, for example, has the goal of becoming a top 10 global producer and supplier of low-emission hydrogen by 2031.

All of the above require solid infrastructure, technical innovation and skilled people. This is certainly good news for the UAE because the country’s commitment to developing these resources will not only boost its non-oil trade, it will also benefit citizens and residents. A recent train journey from Dubai to Fujairah taken by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, showed how the Etihad Rail project will not only be critical in economic terms by boosting logistics, connectivity and supply chains, it will improve the quality of life for those who live here. Job creation, more foreign direct investment and local supply chains for clean energy technologies will be important and beneficial consequences of the UAE’s non-oil
economy.

None of these developments came to fruition overnight. They have required significant strategising, infrastructural investment and technical know-how. That takes years of planning but we are now seeing the fruits of that long-term vision. Success in driving the UAE’s non-oil economy – alongside other important sectors such as tourism and financial services – shows that the country has been prescient in future proofing for uncertain times.