Manufacturing sector grows 55% in five years

Growth in the UAE's manufacturing sector has jumped by 55 per cent since 2001 despite a decline in its overall contribution to the economy, latest government figures revealed.

The contribution of the manufacturing sector to the gross domestic product (GDP) grew by more than half in the five years to 2006, according to findings by Dubai Chamber of Commerce and Industry. But the sector's share of the UAE's non-oil GDP dropped to 18.8 per cent in 2006 from 20 per cent in 2001.

Meanwhile, non-oil GDP share from trade – the second sector in terms of GDP share – has increased from 12.7 per cent to 16.9 per cent between 2001 and 2006.

"Although the manufacturing sector's production increased by more than 100 per cent for the period from 2001 to 2006, its GDP average share decreased by 1.2 per cent points," the report said. The fall in manufacturing's average GDP share indicates the faster growth of GDP shares of other sectors, which, the chamber said, is an "alarming signal" for manufacturing and a call to boost the UAE's industrial development.

The UAE's manufacturing sector contributed an average share of about 23 per cent to the total non-oil production during the 2001-2006 period, followed by the construction sector, which contributed an average of about 16 per cent to the total GDP. Government services and trade sectors followed with about 12.1 per cent and 11.9 per cent of shares, respectively.

According to the Dubai Chamber, the manufacturing sector's real GDP share stood at Dh54.4 billion in 2006. The sector represented about 19 per cent of the total GDP on average for the 2001-2006 period, followed by trade and government sectors. "The [manufacturing] sector is not yet playing a substantial role in foreign trade, since exports of manufactured products represent not more than 3.5 per cent of the total exports," it said.

It said 65 per cent of the total imported products are mainly used for re-export or capital goods for the manufacturing and other sectors.

Manufacturing generates 17 per cent of the UAE's gross fixed capital, behind the transport and communication sectors, whose average share in capital formation between 2001 and 2006 stood at 18 per cent.

The manufacturing sector also represents about 13 per cent of the total employment in the UAE, coming third behind construction and trade. Employment jumped by 45 per cent in the 2001-2006 period, with the sector securing around 306,000 jobs in that time.