The United Arab Emirates (UAE) is keeping a positive outlook for the growth of their recovery post-pandemic. In 2021, their economy expanded by 2.1%, and the UAE Minister of Economy said that it can boost economic output by up to 6% in 2022.
As the UAE develops its non-oil economy, it has enjoyed great benefits thanks to public spending, credit growth, and a positive business outlook in Abu Dhabi. Meanwhile, hosting the Dubai Expo also contributed a significant amount to the economy.
With the diversification of its economy in focus, the UAE is now opening itself up to more opportunities and foreign direct investments that can pull up its gross domestic product (GDP). Despite unfavorable conditions and geopolitical concerns, investors remain optimistic about opportunities in Abu Dhabi.
What role does foreign direct investment play in Abu Dhabi’s GDP growth? How can a positive business outlook in Abu Dhabi help the UAE’s economy expand in the coming years?
The Post Pandemic Emirate
The economic climate of Abu Dhabi showed improvement in 2021, after launching the Economic Stimulus Package in March 2020 in response to the pandemic. This included 16 initiatives to support the emirate’s economic accelerator program, Ghadan 21.
Small and medium-sized enterprises (SMEs) and startup companies were among the beneficiaries of the stimulus package, which allowed them to receive subsidies for electricity and water and exempted startups from performance bonds. Registration fees for commercial vehicles were also waived, as well as real estate registration and authentication, and a 25% reduction in industrial land rental fees.
These packages allowed the emirate to strengthen its economic diversification efforts despite the pandemic. Optimizing these opportunities to look ahead post pandemic enabled gave Abu Dhabi a positive business outlook from 2021 onwards.
Looking at Abu Dhabi’s GDP growth
In 2021, the emirate’s non-oil GDP grew by 4.1%, accounting for a total of 49.7% of the total GDP. Looking at Abu Dhabi’s GDP by sector, the non-oil activities that made significant contributions included agriculture, manufacturing, health and social services, entertainment, and wholesale and retail trade.
With its reputation as one of the easiest cities to do business in the world, Abu Dhabi’s non-oil economy can only flourish moving forward. Specialized zones such as Nibras Al Ain Aerospace Park and Al Ain Industrial City also aides the development of specialized sectors.
Meanwhile, the Industrial City of Abu Dhabi is strategically located between two emirates and is known for its transport connectivity, good infrastructure, and high technological standards, all conducive for manufacturing and other industries looking at expanding in Dubai.
Other non-oil industries that the emirate expects to contribute to their development include pharmaceuticals, chemicals, metals, energy, aviation, and telecommunications. Abu Dhabi also hopes to expand its workforce by encouraging more locals to work in the private sector to support commercial growth.
There are so many things to look forward to in Abu Dhabi, and there is plenty of time to plan how to set up business or expand in the emirate. As Abu Dhabi’s GDP growth continues to be supported by its non-oil economy, industries can expect that there will be a lot in store for them in the emirate, and expanding there will only lead to more development.
