UAE's Abu Dhabi sees strong industrial sector growth amid diversification push

2023-07-19 22:57

(Corrects figure in third paragraph to 172 billion dirhams, not 171 billion dirhams in third paragraph) By Rachna Uppal ABU

(Corrects figure in third paragraph to 172 billion dirhams, not 171 billion dirhams in third paragraph)

By Rachna Uppal

ABU DHABI (Reuters) -Abu Dhabi, the capital of major oil exporter United Arab Emirates, plans to double the contribution from its industrial sector to GDP, a senior government official said on Wednesday, amid growing regional competition to diversify from oil.

Last year the industrial sector's contribution to Abu Dhabi's gross domestic product grew 9.7% year on year to 90.8 billion dirhams ($24.72 billion), according to government statistics shared with Reuters on Wednesday, or 16.4% of its non-oil GDP and just over 8% of total GDP.

Abu Dhabi, which constitutes about half the UAE's industrial sector, wants to increase this to 172 billion dirhams by 2031.

"Oil is important to us in Abu Dhabi," Rashed Al Blooshi, undersecretary at Abu Dhabi's Department of Economic Development, told Reuters.

"But investing in non-oil sectors will have a bigger impact on the GDP ... and we will sustain the growth."

Since 2021, the UAE has also established a strategy of negotiating bilateral trade agreements with a key aim to boost non-oil exports to global markets.

In the first quarter, 27 new manufacturing operations got underway in Abu Dhabi, beating an internal target of 18, Blooshi said, adding the government wants 90 more in 2023 and another 100 by 2024.

Abu Dhabi holds the majority of the UAE's oil wealth, but Dubai, its more flamboyant neighbouring emirate, is considered the region's commercial, financial and tourism hub. The two sometimes compete, while a deepening UAE-Saudi economic rivalry simmers.

Abu Dhabi's non-oil GDP grew 6.1% in the first quarter, according to data from the statistics authority, outperforming overall GDP growth of 3.9% as lower oil prices weighed.

Average growth in the six-member Gulf Cooperation Council (GCC) bloc is expected to slow significantly to 1.5% in 2023 on lower oil prices, according to a Reuters poll on Wednesday, but the UAE economy is forecast to outperform at 2.8%.

($1 = 3.6729 UAE dirham)

(Reporting by Rachna Uppal; Editing by Sharon Singleton)