Manufacturing and Industry: Driving long term growth in the UAE

Shady Elborno - Head of Macro Strategy
Published Date: 04 August 2021

 

The manufacturing sector plays a crucial role in economic development, as a key pillar of growth, and a driver of trade and commerce through the exports of domestically manufactured goods. In the UAE’s drive to diversify its economy and in recognition of the strong potential of the industrial sector to drive its diversification objectives, the UAE launched Operation 300 Billion in March 2021, an ambitious 10 year program which aims to boost the industrial sector’s contributions to the economy. The strategy envisages the industrial sector providing AED 300bn to GDP by 2031, doubling the contribution of both light and heavy industrial manufacturing sectors to the economy. The sector also has the potential to perform well in the longer-term, especially if it is able to harness some of the inherent strengths of the economy such as energy availability, strong logistics and transport links and capital deployment. 

Manufacturing has traditionally played an important role in the UAE’s economic structure, especially in driving some of the earliest diversification initiatives that policy makers in the UAE have undertaken. Dubai and Abu Dhabi have built strong industrial ecosystem in metals and high-value downstream processing sectors through companies like DUCAB and Emirates Global Aluminum (EGA). Northern emirates like Ras Al Khaimah have built successful industrial capacities in building materials, with a very strong international export base. Other key sectors where the UAE has significant capacities include chemical and pharmaceutical manufacturing. Developments in the high-tech aerospace and defense industry manufacturing through companies such as Strata in Abu Dhabi for example, are seen as key sectors that will drive a combination of high value exports, strong and innovative industrial clusters base and high value employment opportunities that attract skilled labor to these fields.

Developing the UAE manufacturing sector will be an important element in reducing economic vulnerabilities especially to external shocks such energy price volatility, which is a key goal of economic diversification. It also makes the economy more self-dependent and reduces reliance on imports, which is positive for the UAE’s long-term trade dynamics. In this report we look at the new industrial policy that will create the roadmap for UAE manufacturing, and we give a concise snapshot of key sectors and players in the UAE manufacturing and industrial sectors. This should give a macro-view of where manufacturing currently stands, with subsequent sector specific reports looking at where those sectors are heading. We believe the outlook for the sector is very strong, reinforced by the importance policymakers have placed on it, and we expect that support to hold the potential for the long-term development of this sector in good stead.

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