Abu Dhabi, Gulf Nations, Tout 2022 GDP Growth Despite Global Challenges
By Arab America Contributing Writer Drew Jackson
United Arab Emirate, Abu Dhabi, has recently announced their real GDP increased by 11.2% in the first half of 2022, compared to the same period in 2021. Additionally, Abu Dhabi has confirmed they have hit a six-year-high quarterly growth rate, with GDP growth exceeding 11.7% compared to Q2 2021.
Rapid real GDP growth was expected for Abu Dhabi, as well as other Arabic oil producing states due to an increase in oil prices and a reluctance for customers to engage in oil trade with Russia. Although the growth was expected, no one could account for the incredible growth in the non-oil sectors.
Oil producing sectors have officially accounted for 49.7% of Abu Dhabi GDP through H1 2022, whilst non-oil producing sectors accounted for 50.3%. This is huge for Abu Dhabi and is a positive indicator for member countries of the Gulf Cooperation Council (GCC) that the ‘Vision 2030’ initiatives are working to diversify the economy.
The Gulf Cooperation Council put forth policy in recent years, requiring member states to heavily invest in economic diversification by 2030. The goal of these “Vision 2030” policies is to ween the oil producing nations off of oil dependency, in an effort to maintain regional stability.
To put this number in perspective, the oil sectors have commonly contributed to Abu Dhabi’s and the UAE’s GDP by a figure of around 70-80% in the last two decades. This reduction in oil contribution does not mean that the economy is shrinking, but that the non-oil sectors are rapidly growing, meaning that the Vision 2030 is on pace.
Where did Abu Dhabi find their massive GDP growth? The non-oil sector had contributed 7.7 billion USD in GDP this year compared to the same time last year. Leading economic activities that contributed to GDP were manufacturing at 8.1% (10% growth rate) and construction at 7.7% (6.9% growth rate).
Economic activities that grew at the largest rates are really where we find how their economy is achieving its diversification goals. Health and Social Services, Food and Accommodation Services, and Scientific Professional and Support Services, all grew at a constant rate of at least 27%.
This strong and rapid growth in the non-oil sector is unprecedented. As Abu Dhabi and other nations around the world are still recovering to pre-pandemic GDPs, Abu Dhabi has significantly reduced their dependence on oil.
H.E Rashed Abdul Karim Al Balooshi, Undersecretary of ADDED stated, “Remarkable growth rates in the non-oil sectors during the first half of 2022, [are] reflecting a competitive outlook of Abu Dhabi’s business ecosystem.”
This is by all accounts a massive step forward for Abu Dhabi. With a GDP of 147.9 billion USD, they now rank fourth in the Gulf, only behind Saudi Arabia, Dubai, and Qatar.
So what’s next for Abu Dhabi and the UAE and are they going to continue to grow at a constant pace?
Economic experts predict that the UAE’s economy will grow by 5% this year and continue to grow over the coming years, albeit at a slower rate than 2022. Nonetheless it is expected for the economy to grow by over 10% by 2024.
Although oil-producing sectors contributed nearly a quarter less to GDP compared to previous years, it does deserve to be noted that the massive 11.2% increase is at least partially caused by rising oil prices. However, what this truly means is that the non-oil producing sectors (prior to oil price rise and Russian boycotts) could have accounted for nearly 60% of real GDP. This massive flip flop in sector dominance of the GDP allows experts to believe the non-oil sectors will continue to grow at a higher rate than expected.
“Economy’s positive growth rates in Abu Dhabi reflect the profound strength and success of the economic diversification policy,” stated H.E. Mohamed Ali Al Shorafa, Chairman of the Abu Dhabi Dept. of Economic Development (ADDED). “[Abu Dhabi Vision 2030] contributed to the economy’s resilience and ability to address global challenges posed by geopolitical and economic factors that directly affected strategic sectors such as energy and international trade.”
Abu Dhabi is just the most recent example of the benefits to be reaped by Gulf nations who correctly implement their 2030 vision plans. Saudi Arabia has made headlines for their economic diversification due to Vision 2030, as well as Qatar who is currently hosting the FIFA World Cup.
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Information for this article was sourced from: Abu Dhabi Media Office Report, National News, International Monetary Fund, UAE 2030 Vision, and GCC Policy.
