Abu Dhabi’s industrial strategy helps to lift GDP

Reuters/Jumana El Heloueh

• Manufacturing activities added 8.1% to GDP during H1 of 2022
• Non-oil activities contributed 50.3% to the total GDP
• Investment in Abu Dhabi industrial sector has trebled in past year

When US aerospace firm Triumph agreed to set up the Middle East’s first engine accessory repair and overhaul centre by 2024, it became the latest in a growing list of international companies attracted to Abu Dhabi.

Supplement manufacturer Thorne, petrochemical services provider Elliot Group and biopharma firm OnePointOne are waiting in the wings as Abu Dhabi works to establish itself as a major manufacturing hub in the GCC. Its strategy has helped raise the emirate’s gross domestic product growth to its highest level in six years.

New data from Statistics Centre – Abu Dhabi showed the expansion of Abu Dhabi’s GDP hit 11.2 percent in the first half of 2022. 

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Officials said the rise reflected the emirate’s ability to maintain competitiveness and sustain growth despite global economic challenges.

According to Statistics Centre estimates, the quarterly GDP growth rate reached its highest value since 2016 during the second quarter of 2022, when it hit 11.7 percent.

Manufacturing is at the heart of Abu Dhabi’s efforts to boost its non-oil economy – and made up 8.1 percent of GDP contributions during the first half of 2022, while recording a growth rate of 10.2 percent.

Non-oil contributed 50.3 percent to the total GDP in the first six months of the year.

Last week the Abu Dhabi Department of Economic Development launched a smart manufacturing index that it said would facilitate the private sector’s transition to industry 4.0 (fourth industrial revolution) technologies, applications and methods. The initiative is part of the Abu Dhabi Industrial Strategy, which began in June.

The push by the government to expedite adoption of industry 4.0 across manufacturing and industrial businesses aims to transform the sector. It is targeting growth to AED172 billion ($46.8 billion), the creation of 13,600 new jobs and an increase in the emirate’s non-oil exports to AED178.8 billion by 2031.

Investment in Abu Dhabi’s active industrial sector has tripled over the past year, according to the Industrial Development Bureau.

The total value of factories that switched to the in-production stage rose to AED3.1 billion during the first six months of 2022, compared to AED1.03 billion in the same period last year.

The figures also showed that construction and building activity made a significant contribution to GDP with 7.7 percent, and grew by 6.9 percent. Wholesale and retail trade activity contributed 5.9 percent and the financial and insurance sector 5.5 percent.

At the end of H1, Abu Dhabi’s real GDP value (at constant prices) exceeded AED543 billion. The value of non-oil GDP increased AED28.4 billion compared to the same period last year to reach AED273 billion in total.

All non-oil economic activities and sectors showed positive growth rates at constant prices during H1, said the Statistics Centre, adding that the healthcare, accommodation and food services, wholesale and retail trade and real estate were among the fastest growing over the past 12 months.

Mohamed Ali Al Shorafa, chairman of the Department of Economic Development, said: “The economy’s positive growth rates in Abu Dhabi reflect the profound strength and success of the economic diversification policy, which contributed to the economy’s resilience and ability to address global changes posed by geopolitical and economic factors that directly affected strategic sectors such as energy and international trade.

“The Abu Dhabi economy continues to reap the benefits of the effective policies guided by the wise leadership to strengthen the pillars and foundations of the economy, maintaining a competitive performance while attracting investments with more initiatives to achieve the strategic objectives of Abu Dhabi.”

Rashed Abdul Karim Al Balooshi, the department’s undersecretary, added: “The vital performance of the emirate’s economy over the last few years resulted in remarkable growth rates in the non-oil sectors during the first half of 2022, reflecting a competitive outlook of Abu Dhabi’s business ecosystem. 

“Abu Dhabi implemented economic programmes in recent years to facilitate the establishment and operation of new businesses across the emirate giving the necessary factors that can stimulate growth in various sectors.”

The figures come after it was revealed last month that the state-run Emirates Development Bank approved AED4.4 billion in loans during the first nine months of 2022, up 600 percent year-on-year.

The bank supports the country’s economic agenda by providing indirect and direct financing to startups, small and medium-sized enterprises and large corporates in industrial projects across five sectors: manufacturing, infrastructure, advanced technology, food security and healthcare.

The bank’s contribution to UAE GDP reached AED2.6 billion as of September 30, rising 625 percent year-on-year.

CEO Ahmed Mohamed Al Naqbi said the bank was committed to providing AED30 billion in financing by 2026 to develop and diversify the UAE economy.