More Than Gold, More Than Glitter

The UAE projects a growth rate of 4% for 2017. Which sectors will drive this growth and how will it contribute to the nation’s ultimate goal of diversification?

The non-oil sectors will provide the needed impetus to drive the country’s economy this year and beyond. As the UAE steadily moves toward reducing its heavy dependence on oil revenues, we expect to see a number of relevant initiatives and programs designed to strengthen vital sectors such as renewable energy, tourism, education, science, innovation, and information technology dominating government policies and regulations. This is clearly evident in the country’s Higher Policy for Science, Technology and Innovation, in which more than 100 initiatives worth over USD81.7 billion have been identified. These key initiatives cover the health, education, energy, transport, water, and technology sectors. 2017 will present broader prospects for growth in our local industries, thereby reinforcing the country’s resilience to global economic changes and other evolving variables.

How have the ministry’s efforts to attract investors been reflected in capital inflows, and what is the UAE’s current position in the global trade arena?

In terms of FDI, total flows to the country in 2016 amounted to about USD10 billion. The size of cumulative investments, on the other hand, reached about USD119 billion. The policies and legislation the government is working to enact by 2017 will have a very positive impact on raising foreign investment flows into the country. Investment growth was not just limited to inflows, though; the volume of the UAE’s outbound investments stood at USD9.3 billion in 2015, up from USD9 billion the previous year. This made the UAE the largest Arab foreign investor in 2015, with cumulative investments reaching USD87.4 billion. The country also maintained its prestigious position as a regional and global capital for foreign trade and an influential import, export, and re-export hub. The UAE’s non-oil direct exports grew significantly in 2015, up by 22%. For the first half of 2016, the UAE’s total non-oil foreign trade reached USD215 billion. This should grow by 5% in 2016, and 7% in 2017.

What have been the main initiatives of the Ministry of Economy to boost the industrial sector to reach the target of 20% GDP contribution by 2021?

We are deeply committed to helping young local entrepreneurs and SMEs to play a bigger role in the UAE’s economic progress. The approval of the Foreign Investment Law also reflects the government’s commitment to prioritizing value-added projects in industrial and other sectors.

How would you assess the development of non-oil exports and which industries are leading the way forward here?

We have made significant progress due in part to the government’s bigger emphasis on knowledge, innovation, advanced technology, human capacity building, and scientific research. Our economic diversification efforts have already resulted in high-performing non-oil sectors, which stand to increase their aggregate economic contributions to 4.6% by 2020. The UAE’s robust economic, trade, and investment relations with key Asian and African markets, as well as other countries, will drive our non-oil export and re-export activities in the short and long term. The rapid development of the industrial sector saw industrial investments increase from USD34.7 billion in 2015 to an estimated USD35.4 billion by the end of 2016, which contributed to around 12.1% of non-oil GDP. Meanwhile, tourism is another important contributor to the national income. It is expected to gain more importance and reflect the enormous potential of the UAE.