The UAE’s non-oil economy surged by about 10 per cent in real terms last year and more than 20 per cent in current prices to become the fastest growing sector in the six-nation Gulf Co-operation Council (GCC).
The performance is set to continue in 2007 as the country pursues long-term economic diversification programmes focused on encouraging non-oil investments and attracting foreign capital into productive sectors. Figures from the International Monetary Fund, which cited UAE Government statistics, showed the country’s non-oil gross domestic product (GDP) grew by 11.1 per cent in real terms last year and was projected to expand by about 10.1 per cent in 2007, the highest growth rate in the GCC.
In current prices, growth is expected to be much higher, standing at around 21 per cent this year compared with 23 per cent in 2006, according to the UAE Ministry of Economy and Planning.
Experts said the surge in the non-oil economy was a result of massive investments by the public and private sector, high foreign direct investment, sharp expansion in such sectors as industry, services and construction, and a steady growth in the free zones.
Such investments have sharply boosted the non-oil sector’s share of the GDP, jumping from just 30 per cent in 1980 to nearly two thirds at present.
Despite a surge in the oil-sector in 2007 because of a sharp rise in prices and maximum crude output by the UAE, the non-oil sector was the dominant component of the GDP, accounting for 65 per cent. Its value was estimated at about Dh455 billion of the expected total GDP of Dh698bn.The ministry’s figures showed investment grew by around 19 per cent to a record Dh144bn this year from Dh121bn in 2006.
About 58 per cent of the investments came from the private sector this year, indicating its growing role in the non-oil economy. As for oil, its real GDP grew by around 2.5 per cent this year.