Emirates: The UAE economy today boasts a global identity and is reaping the fruits of a solid foundation laid out under the leadership of The President, His Highness Sheikh Khalifa bin Zayed Al Nahyan.

Sheikh Khalifa’s leadership came into effect on November 3, 2004, and the economy has since been spiraling upwards. In 2004, the UAE’s gross domestic product (GDP) hit Dh328.7 billion, a staggering nominal increase of nearly 19.7 per cent over the 2003 GDP of Dh274.8 billion.

According to latest figures, in 2021 the economy crossed international economic expectations by registering the highest rate in the region of Dh1.489 trillion. The UAE economy posted a strong start to the year and is forecast to expand by 6.2 per cent in 2022, despite lingering concerns about potential new Covid-19 variants. The pace of growth continues to pick up after the GDP rose by 3.8 per cent in 2021, surpassing pre-pandemic levels of 2019, according to a Majid Al Futtaim ‘State of the UAE Retail Economy’ Report.

Last year, the nation celebrated the 50th anniversary of its founding and emerged as a stronger, more developed, and more prosperous than ever before nation. The UAE has moved from an oil economy to a diversified economy, paving the way to futuristic industries that will disrupt the nation, allowing younger generations to explore the opportunities that the nation offers to contribute towards development and growth.

The UAE’s real GDP growth is projected to accelerate in 2022 and 2023, led by an expansion in domestic credit, current account surplus amidst high oil prices, and a growth in non-oil sectors. The UAE’s economic growth is projected to accelerate from 1.4 per cent in 2021 to 4.3 per cent in 2022 and 5.2 per cent next year, according to UBS’ latest report. The onset of the pandemic displayed the UAE’s ability to combat every challenge and to ensure the welfare of its citizens.

Recently, at World Government Summit 2022 held under the theme “Comprehensive Industrial Ecosystems: Driving National Growth”, Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, affirmed that the UAE leadership, headed by the President His Highness Sheikh Khalifa bin Zayed Al Nahyan, attaches critical importance to supporting citizens to benefit from the industrial development witnessed by the country, as well as from the upcoming ambitious industrial projects.

Sheikh Mansour said: “Ten years ago, the share of the industrial sector in the UAE’s GDP was approximately eight per cent... Today, this number has increased by just one per cent to nine per cent. This reflects the urgent and vital need to provide more support to the industrial sector and industrial projects. This is driving the UAE’s leadership to a sharp focus on the national industrial sector, its development and ambitious projects.”

The UAE is concentrating, during this stage, on developing its strategic partnerships in knowledge exchange and the transfer of early industrial technologies.

“The UAE is working to attract investments from Arab countries, GCC countries and all over the world. Adding that the UAE’s concentration on a series of pivotal industrial sectors, including food, medication and defence, is based on its strategic importance as main pillars of the national economy,” added Sheikh Mansour.

As the nation emerged from the pandemic’s impact, it witnessed a rebound and celebrated the global Expo 2020 Dubai which remains a national pride for every UAE resident. The UAE performs favourably in the “Doing Business” global ranking issued annually by the World Bank, according to a research report by Oxford Business Group.

The UAE was 16th out of 190 countries and territories in the 2020 edition, outperforming all other countries in the region by a considerable margin for the sixth year in a row. The next-highest-ranked country in the Middle East was Bahrain (43rd), followed by Saudi Arabia (62nd). The UAE was in the top 10 for three of the 10 factors that contribute to a country’s rating, ranking first for getting electricity, third for dealing with construction permits and ninth for enforcing contracts.

Abu Dhabi economy

The rich legacy of Sheikh Khalifa’s vision is now being transformed in Abu Dhabi, as it has significantly raised its economic profile both regionally and internationally, which has been home to the world’s sixth-largest proven oil reserves. The financial buffers have helped it diversify and yield steady non-oil revenue. This has largely taken the form of expanding domestic industries, from aviation to renewable energy, enabling the emirate to weather a prolonged period of reduced oil prices and fiscal austerity that has put pressure on growth.

Centered on the Abu Dhabi Economic Vision 2030, a wide-ranging economic development strategy launched in 2008 to reduce dependence on oil and gas and foster a knowledge-based economy, the emirate has made important strides towards securing its growth plans amid global and regional risk, and ensuring wealth for future generations. Successive five-year plans within the framework of the Abu Dhabi Economic Vision 2030 aim to assure the achievement of the emirate’s goals.

Economic Vision 2030

The emirate’s efforts to reduce its reliance on hydrocarbons were given a major impetus in 2008 with the publication of the Abu Dhabi Economic Vision 2030 by the General Secretariat of the Executive Council, the Abu Dhabi Council for Economic Development, and the Abu Dhabi Department of Economic Development (then the Department of Planning and Economy).

To support Abu Dhabi Economic Vision 2030 in 2016, a new five-year strategy known as the Abu Dhabi Plan was launched. This blueprint outlined shorter-term goals, including creating an effective private sector that provides business opportunities.

With these plans as a guide, the government intends to develop a diversified, sustainable economy that is integrated into global markets. Creating new sources of income and developing industries that are part of a knowledge-based economy are particular focal points, especially in high-value-added, non-oil sectors like tourism, manufacturing, logistics, health care, education, financial services and telecoms. While working to reach all of the emirate’s goals requires a concerted effort by both private and public entities, private sector funding and foreign direct investment will continue to play an important role in this process as the main drivers of economic growth.

According to Abu Dhabi Economic Vision 2030, non-hydrocarbons sectors of the economy, including petrochemicals, are projected to account for 64 per cent of the emirate’s GDP by 2030, while oil and gas activities would contribute the remaining 36 per cent.

The emirate of Abu Dhabi is part of the UAE, the GCC’s second-largest economy and 30th largest in the world. The UAE possesses the world’s sixth-largest proven oil reserves, but has worked hard to diversify its economy away from a reliance on hydrocarbons: at the federal level, the non-oil sector accounts for around 75 per cent of nominal GDP. Abu Dhabi is a major contributor to the UAE’s GDP, accounting for some 60 per cent.

Strategy

Ghadan 21 is a Dh50 billion ($13.6 billion) economic accelerator programme that was launched in 2018 and will be implemented until 2021. The strategy features a diverse array of initiatives focused around four main pillars: business and investment; society; knowledge and innovation; and lifestyle.

Innovation

Ghadan 21, or Tomorrow 21, is Abu Dhabi’s Dh50 billion ($13.6 billion) economic accelerator programme and one of the most ambitious development strategies deployed by the emirate. Launched in September 2018, the programme represents the government of Abu Dhabi’s response to a series of external shocks, including geopolitical tensions, a low global growth scenario and a prolonged decline in oil prices that began in mid-2014.

The businesses are extremely bullish about the UAE economy outlook and are now working on new strategies as global businesses descend in the desert to expand operations.

Alain Bejjani, chief executive officer, Majid Al Futtaim - Holding, said: “The fundamentals are strong and the outlook for economic growth in 2022 remains positive. Although some headwinds around price pressures, rising interest rates, as well as continued supply chain disruptions, can be expected through this year and next, both the retail and UAE economy are expected to build on a strong start to 2022 and propelled by increased spending and a growing influx of visitors and investors from overseas. The government’s plans, including its sustainable development vision, have put the country on a path of sustained economic growth and enhanced wellbeing for residents and visitors alike.”