Overcoming economic headwinds, the United Arab Emirates (UAE) economy is expected to grow by 5.7 percent in 2024. This is according to the latest forecast by the UAE Central Bank. And central to this growth are the UAE’s top industries.
The UAE economy in 2024
While oil remains a vital pillar of the country’s economy, the UAE has been recording impressive growth in its non-oil sector. Speaking to the state-run Emirates News Agency, Younis Hajji Al-Khoori, undersecretary of the UAE’s Ministry of Finance, lauded the country’s efforts to expand its economic horizons.
“Our efforts to diversify the economy and promote sustainable growth have proven effective. The country expects non-oil GDP growth to reach 5.9 percent in 2023 and to grow by 4.7 percent in 2024,” he stated.
The UAE’s top industries
According to Statista, the UAE’s GDP will continuously rise between 2023 and 2028. It will increase by around $143.3 billion, hitting $652.44 billion by the end of the forecast period. But which industries could propel this growth? Here are the UAE’s top industries that have shaped its economy over the past years.
Hospitality and tourism
The UAE government recognizes the potential of its hospitality and tourism industry. Under its UAE Tourism Strategy 2031, the country plans to attract $27 billion in new investments. It also aims to welcome 40 million hotel guests by 2031.
Figures show how the country’s is poised to have a more robust tourism sector. In the first half of 2023, the UAE capital, Abu Dhabi, had 2.4 million hotel guests. This mirrors a 34 percent year-on-year (YoY) increase. Meanwhile, Dubai recorded 15.37 million overnight international visitors in the first 11 months of last year. According to the World Travel and Tourism Council, tourism and travel will account for 10.2 percent of the UAE economy, generating over 872,000 jobs by 2033.
Logistics and transport
According to a Bank Audi report, the transportation industry is one of the key sectors of the UAE. And in 2023, the industry’s expansion was “mainly driven by high urbanization rates and efforts to boost tourism, as well as internal and external logistical connectivity.”
This growth underscores the critical role of transportation in the UAE’s economic development. Currently, roads and bridges account for 40 percent of the transport project pipeline in the UAE. Meanwhile, railway infrastructure makes up 33 percent. Moreover, Fitch noted that metro line developments in Abu Dhabi and Dubai will continue for the next ten years as part of the Self-Driving Transport program. By 2030, this program hopes to have 25 percent of all transportation trips become smart and driverless, with metro lines as a key component.
With the UAE enhancing interconnectivity, several other sectors will boom. For instance, the completion of the Dubai Metro Blue Line is expected to impact the city’s real estate, driving property values upward.
Real estate
The UAE boasts a robust real estate sector, supported by government initiatives and incentives, high-quality projects and the country’s overall appeal in terms of work-life balance.
Off to a great start, Abu Dhabi’s real estate market recorded transactions worth $1.36 billion in January 2024 alone. These transactions cover both sales and mortgage deals, according to DARI. For this year, ValuStrat predicts that the UAE capital will see its residential capital values jump by 3 to 5 percent.
Similarly, Dubai follows the same trend, witnessing $9.6 billion in sales in the same month. This figure is about 27 percent higher than January 2023. Off-plan properties are particularly on the rise, with a YoY growth of 25 percent.
Construction
The UAE’s construction market is a major player in the Middle East, thanks to massive and iconic projects like the Burj Khalifa, Palm Jumeirah and Dubai Marina. The industry has been growing steadily, with its worth hitting $38.99 billion in 2023.
As the government strives to make various cities more conducive for living, working and traveling, this specific sector will only expand. The emergence of robotics, drone technology and artificial intelligence (AI) is also playing a crucial role in making several aspects of construction safer, more efficient and more cost-effective.
Banking and finance
According to Tatiana Leskova, associate director of corporate ratings at S&P Global, the financial services sector is one of the major industries that will impact the economy of the UAE, particularly its financial capital, Dubai.
“In Dubai, we expect continued strong momentum in the hospitality, wholesale and retail, and financial services sectors to drive growth in 2024-2025,” Leskova shared.
Boasting over 50 banks, the banking sector, in particular, is a robust one. In 2023, the top 10 publicly listed banks generated net profits worth $12.6 billion. This figure is a 63 percent YoY. As the industry embraces digital transformation, the services it offers will only be more accessible. The central bank forecasts an $18.7 billion revenue from digital payments by 2031.
Retail
As Leskova stated, retail is one of the UAE’s top industries that will continue to shape the economy in the next few years. By 2027, the retail industry could reach $70.5 billion. Apart from locals and expatriates’ increased expenditure — usually toward quality and sustainable products — the influx of tourists will also continue driving retail forward.
At the core of the country’s retail landscape is Dubai. It’s not just home to several shopping malls (including the famous Dubai Mall), it also hosts shopping festivals that help keep the industry vibrant.
E-commerce
According to EZDubai’s E-commerce Report in the Middle East and North Africa (MENA), the e-commerce market in the region could reach $57 billion in 2026. Leading the pack are the UAE, Saudi Arabia and Israel.
Globally, ECDB ranks the UAE as 46th in terms of e-commerce market size, even ahead of Singapore. Electronics (covering gadgets) has the largest share of the country’s e-commerce revenue at 33.8 percent. Fashion, grocery, and hobby and leisure follow with 30.8 percent, 13.8 percent and 9.3 percent, respectively. The country’s high internet penetration rate and a shift in customer behaviors are the biggest reasons this particular industry thrives.
Healthcare
The UAE’s population could reach 11 million by 2030. And this means one thing: There will be more demand for healthcare.
The UAE has one of the best healthcare systems in the region and across the globe. This highlights the UAE government’s commitment to giving its citizens top-quality healthcare services. Like other top industries, healthcare has undergone significant digital transformation, with the continued adoption of telemedicine and telehealth services. The utilization of AI for diagnostics and patient care is revolutionizing treatment approaches. Healthcare facilities have also been using Electronic Health Records (EHR) to store patient data and make it easier to access securely.
Consulting
The global consulting industry is rather broad, encompassing various domains such as strategy, management, operations, financial advisory, human resources and information technology consulting. These core domains further cover services in more than 200 functional areas.
In the UAE and the broader Gulf Cooperation Council region, the favorable economic environment proves to be advantageous for consulting firms. For instance, one of Dubai’s leading consultancy firms, AESG, recorded a 46 percent increase in revenue in 2023. The company focuses on engineering and environmental planning.
AESG CEO Saeed Al Abbar explained, “Middle East markets — in particular, Saudi Arabia and the UAE — are bucking global trends and drawing the focus of the global development and construction community to the region.”
“While the opportunity is indeed exciting, the ambitious projects being undertaken require global expertise to be balanced by a deep understanding of regional practices, nuances, and norms,” he added, underscoring the importance of tapping consultancy firms for tailored solutions.
Oil and gas
The UAE is one of the world’s top oil producers, with an output of 3.30 million barrels per day (mbpd) in 2023. Abu Dhabi has about 96 percent of the country’s oil reserves. And the state-owned Abu Dhabi National Oil Company (ADNOC) is a leading name in the sector. By 2030, ADNOC eyes to hit a maximum sustainable production capacity of 5 mbpd. Additionally, the company aims to decrease its operational greenhouse gas emissions by 25 percent by the same year. This aligns with the country’s target of achieving net-zero emissions by 2050.
The sector also remains attractive despite production cuts. Factors such as low corporate taxes, no currency restrictions, advanced infrastructure and technology access contribute to this. The government has also invested in research and development (R&D) to support the industry’s growth.
Final thoughts
The UAE continues its path to sustained economic growth in 2024, and its diverse range of top industries will drive it. These include hospitality and tourism, logistics and transport, real estate, construction, banking and finance, retail, e-commerce, healthcare, consulting and oil and gas. Across these sectors, digital transformation and sustainability play a crucial role, further ensuring prosperity for the country in the following years.
For a detailed perspective on the property market, visit: Dubai - Real Estate Review Q4 2023
