UAE economy accelerates on non-oil strength

The United Arab Emirates has consolidated its standing in 2025 as one of the world’s fastest-growing economies, underpinned by a surge in non-oil activity, sustained investment inflows and a regulatory framework designed to attract capital and talent. Data released through the year point to broad-based expansion across trade, manufacturing, logistics, tourism, finance and technology, reinforcing a shift away from hydrocarbons as the primary engine of growth.

Non-oil foreign trade climbed 24.5 per cent in the first half of 2025 to AED1.7 trillion, a pace that far exceeds the prevailing global trade growth rate. The increase reflects rising re-exports, stronger demand from Asia, Europe and Africa, and the UAE’s role as a commercial bridge linking major markets. Officials have highlighted gains in machinery, electronics, precious metals, food products and pharmaceuticals, supported by expanded port capacity, faster customs procedures and new trade agreements.

Investment indicators have moved in tandem with trade. The UN Conference on Trade and Development’s World Investment Report 2025 ranked the UAE 10th globally for inbound foreign direct investment in 2024, with inflows of AED167.6 billion. That placing keeps the country among the world’s most attractive destinations for capital, alongside much larger economies, and underscores confidence in the policy environment, infrastructure and legal protections available to investors.

Economic planners attribute the momentum to a combination of structural reforms and targeted incentives. Liberalised ownership rules, long-term residency options for professionals and entrepreneurs, and streamlined licensing have lowered barriers for international firms. Specialised free zones continue to draw companies in logistics, clean energy, advanced manufacturing, fintech and digital services, while onshore jurisdictions have simplified company formation and compliance.

Non-oil GDP growth has been supported by strong domestic demand and an expanding population of skilled workers. Tourism has posted record levels of hotel occupancy and visitor spending, aided by expanded air connectivity and major events that have kept demand resilient across seasons. Retail and hospitality have benefited from rising consumer confidence, while real estate transactions have remained active across residential, commercial and industrial segments.

Manufacturing has emerged as a key contributor, with investments flowing into metals, food processing, pharmaceuticals and building materials. The push to localise supply chains and boost exports has been reinforced by incentives for advanced manufacturing and the adoption of automation and artificial intelligence. Renewable energy and clean technology projects have also attracted capital, aligning economic growth with climate commitments.

The financial sector has played a central role in channelling investment. Banks have reported healthy credit growth to businesses, while capital markets have seen new listings and debt issuance that broaden funding options. Asset managers and private equity firms have expanded regional operations, using the UAE as a base for Middle East, Africa and South Asia strategies. Regulatory clarity in digital assets and fintech has further widened the investor base.

Trade policy has complemented domestic reforms. Comprehensive economic partnership agreements have reduced tariffs and opened access to fast-growing markets, supporting exporters and logistics providers. Improved customs digitisation has shortened clearance times, enhancing the country’s competitiveness as a trans-shipment hub. The scale of non-oil trade growth indicates that these measures are translating into higher volumes rather than merely price effects.