meed-logo

line1 line2 line3
SIGN IN / REGISTER

Non-oil activity underpins UAE economy

11 April 2024

The latest news and analysis on the UAE includes:

> Dubai real estate boosts construction sector
> UAE and Kenya launch digital corridor initiative
> UAE in talks to invest in European nuclear power infrastructure
> Abu Dhabi’s local content awards surge to $12bn
> Dubai tunnels project dominates UAE pipeline
> UAE marks successful power project deliveries

 

Economic activity in the UAE appears to be holding up relatively well amid the regional turmoil sparked by the start of the Gaza war in November.

Abu Dhabi recorded GDP growth of 3.1% in 2023, according to full-year estimates released by the Statistics Centre Abu Dhabi on 1 April. That marks a substantial drop from the 9.3% level seen in 2022, but an improvement on the 2.3% growth over the first nine months of 2023.

Despite falling oil prices and the disruption to Red Sea shipping in the final quarter, there have been ongoing positive signs for the non-oil sector, which now accounts for around 53% of the total economy. Non-oil activity grew by 9.1% in 2023, down only slightly from the 9.2% level recorded a year earlier.

That non-oil activity is likely to continue to be a key element for economic growth for as long as the UAE and its partners in the Opec+ alliance maintain their voluntary restrictions on crude production. There is no clear timeline for when that policy might change, but David Pickett, assistant economist at Oxford Economics, said he anticipated “a significant increase in oil production from 2026, aided by new facilities and subsiding geopolitical uncertainty”.

In the meantime, the Central Bank of the UAE has adjusted its growth expectations for this year, cutting its forecast for 2024 from the previous 5.7% to 4.2% while predicting a rebound to 5.2% the following year—figures that are higher than many independent observers’ expectations.

Trade and investment

A wave of free trade deals is helping the country’s economic prospects. To date, the UAE has signed comprehensive economic partnership agreements (CEPAs) with 12 countries, the most recent being with Kenya in late February. Another is due to be finalised with Malaysia by June.

Deals with India, Indonesia, Israel, Turkey and Cambodia have already come into effect, while others with Colombia, Costa Rica, Georgia, Kenya, Mauritius, South Korea and the Republic of Congo are all in line to follow. Trade talks are ongoing with numerous other countries, including Australia, Chile, the Philippines and Vietnam.

However, the rapid pace of negotiations means it is not yet clear what impact these deals are having on trade flows.

“It is arguably too early to assess the economic impact of these trade agreements, with many coming into force less than 12 months ago and with full bilateral trade data for 2023 yet to be published,” said Jeanne Walters, senior economist at Dubai-based Emirates NBD, in a report published in early March.

Also helping the country’s position is its release in February from the strictures of the Paris-based Financial Action Task Force’s ‘grey list’ of jurisdictions under increased monitoring. The UAE authorities had been targeting this development for some time, and it should ease the path of economic growth for a country that relies heavily on international trade.

Minister of State Ahmed Bin Ali Al Sayegh set out the decision’s importance soon after the announcement, saying it “enhances investors’ and international financial institutions’ confidence in the country’s economy and financial system, especially considering the UAE’s status as a financial, commercial and economic hub”.

One measure of the country’s commercial reputation is its ability to attract investment. Despite increased competition from Saudi Arabia for international capital, a March report by Emirates NBD Research found that the UAE was second only to the US globally in terms of the number of greenfield foreign direct investment (FDI) projects it attracted in 2023.

The number of UAE FDI projects for 2023 was recorded at 1,280, up 36% on the previous 12 months. Most of these were in Dubai, which attracted 1,036 projects – more than any other city in the world – while Abu Dhabi had 172 projects.

In an effort to continue to attract international capital, the government is now said to be looking at offering 10-year ‘golden licences’ to businesses. The topic was discussed at a meeting of the Economic Integration Committee, chaired by Economy Minister Abdulla Bin Touq, in late March.

Inclement geopolitics

Perhaps the biggest cloud on the horizon is the brutal Gaza war, which could yet have a larger economic and domestic political impact, not least because of the sensitivity around the UAE’s diplomatic relations with Israel.

Like other Gulf countries, the UAE has been sending a steady stream of humanitarian aid to Gaza, but those efforts received a setback on 2 April, when Israel attacked an aid convoy run by World Central Kitchen – a partner of the UAE and others in the Amalthea Initiative aimed at providing a maritime corridor for aid from Cyprus to Gaza.

The UAE’s Ministry of Foreign Affairs issued a statement in which it “condemned in the strongest terms” the Israeli strike. Emirati officials were already understood to be considering ways to offer more protection to aid deliveries, and this will now be even higher up the agenda.

Even as relations have soured, there has been no indication that the country is considering altering its diplomatic ties with Tel Aviv, forged under the Abraham Accords of September 2020.

Nevertheless, while there has been little outward sign of public discontent within the UAE over the conflict, officials around the Gulf are said to be increasingly wary of the potential for the war in Gaza to cause a popular backlash.

One lesson from the broader region in recent decades is that an economic downturn can encourage political discontent, too, but it is far easier to maintain public order in a prosperous economic environment. By that measure, the UAE should have little to fear, given its robust non-oil performance of late.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11662621/main.gif
Dominic Dudley

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Taqa raises $750m to finance water projects

    30 July 2026

    Abu Dhabi National Energy Company (Taqa) has issued a $750m five-year blue bond to finance sustainable water and wastewater management projects.

    The company said the transaction is the largest blue bond issuance in the Europe, Middle East and Africa region. It is also the largest blue bond issued by an integrated power and water utility globally.

    Issuing the bond allows Taqa to raise money from investors specifically to support water-related environmental projects. These can include desalination, wastewater treatment, water recycling and reuse, and infrastructure that improves water efficiency.

    It is the first blue bond issued under Taqa’s Green and Blue Finance Framework, and follows another blue financing transaction in the UAE earlier this year.

    On 8 January, Dubai-based Emirates NBD bank announced the completion of a $1bn dual-tranche sustainable bond issuance, comprising a $300m blue tranche with a three-year tenor and a $700m green tranche with a five-year tenor.

    Emirates NBD said at the time that the $300m tranche was the largest blue bond issued in the UAE and GCC. The proceeds are intended to support marine conservation and sustainable water projects, while proceeds from the green tranche will finance green initiatives.

    Taqa launched its original Green Finance Framework in 2023 and updated it in 2026 to include blue financing instruments. The latest issuance takes its total green and blue labelled bond issuances to $2.6bn since 2023.

    The Taqa financing also comes as the company expands and modernises its water infrastructure. Taqa is targeting reverse-osmosis technology for 66% of its desalination capacity by 2030, up from about 40% in 2025.

    In June, Taqa awarded a contract for the construction of a 1-million-cubic-metre emergency lagoon in Abu Dhabi. The project will be developed in two phases.

    Phase one has a capacity of 500,000 cubic metres and is planned to be completed within 18 months of the contract award.

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17845953/main.jpg
    Mark Dowdall
  • UAE renewables firm secures $375m in financing

    30 July 2026

    Positive Zero, the UAE-based renewable energy firm, has announced the successful closing of a financing facility of up to $375m.

    The long-term financing was arranged by Paris-headquartered Natixis Corporate & Investment Banking (Natixis CIB) and Saudi Arabia-based The Arab Energy Fund.

    Natixis CIB also acted as financial adviser, facility agent, security agent and green loan coordinator for the transaction.

    “The non-recourse financing is the first transaction of its kind in the region for a diversified portfolio of decentralised infrastructure assets, including distributed solar power generation, energy efficiency and clean mobility solutions,” Positive Zero said in a statement.

    “The financing will provide substantial long-term capital to support Positive Zero’s continued expansion in the United Arab Emirates, Saudi Arabia, Bahrain, Oman and Qatar, funding the growth of its distributed infrastructure portfolio, capital expenditure programme and strategic development initiatives,” the Dubai-based firm said.

    The new debt facility secured by Positive Zero builds on US-based BlackRock’s investment of up to $400m in the company in 2023, “further strengthening the company’s capital structure and supporting the next phase of its growth”.

    Positive Zero has the largest distributed solar capacity in the region with more than 500MW in operations and under construction, avoiding more than 450,000 metric tonnes a year of carbon emissions.

    The company has also saved over 100 million kilowatt-hours (kWh) in energy consumption across its client portfolio through its energy-efficiency solutions.

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17845491/main3835.jpg
    Indrajit Sen
  • US-Saudi consortium to build $5bn refinery outside Strait of Hormuz

    30 July 2026

    Register for MEED’s 14-day trial access 

    A consortium of privately owned US and Saudi companies has announced an investment commitment of $5bn to build an integrated oil refining, storage and export facility outside the volatile Strait of Hormuz shipping lane.

    After three years of evaluating sites across the Gulf, the consortium has shortlisted three GCC locations beyond the Strait of Hormuz. Discussions have advanced over the past two years, with a preferred site expected to be selected by the end of 2026.

    The consortium, Mera Oil, comprises Fort Worth, Texas-based MWG Enterprises; the US-based Patel Family Office; and PWS, an associate company of Saudi Arabia’s AHQ Group.

    Mera Oil said it remains open to alternative proposals that meet its infrastructure, resilience and development requirements.

    The proposed project will feature a 200,000-barrel-a-day refinery, deepwater port connectivity, large-scale crude and refined-product storage, and marine export facilities.

    A pre-feasibility study covering refinery design, logistics, capital requirements and execution planning is at an advanced stage.

    Once a host jurisdiction is confirmed, the project will proceed to detailed site assessments and engineering design, with mechanical completion targeted for end-2029, followed by commissioning and the start of commercial operations.

    The consortium plans to focus on producing high-specification middle distillates, including ultra-low sulphur diesel and jet fuel, for selected international markets.

    The project is expected to occupy about 1,200-1,500 acres of port-connected industrial land and could create up to 3,000 direct jobs, and around 15,000 indirect and induced jobs, during construction and operations.

    Mera Oil is also progressing discussions with feedstock suppliers and expects financing to include sponsor equity, sovereign and institutional investment, project finance, export-credit support and sharia-compliant funding structures.

    “Designed as a route-resilient energy hub, the development aims to strengthen regional manufacturing, logistics, technical expertise and energy security,” Mera Oil said.

    The first phase of the planned investment will “incorporate energy-efficient refining technologies, emissions-control systems, and potential future capabilities including sustainable aviation fuel co-processing and carbon management.”

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17843946/main.jpg
    Indrajit Sen
  • Local contractor to build nine Bahrain substations

    30 July 2026

     

    Bahrain’s Electricity & Water Authority (EWA) has awarded the local Al-Kooheji Electrical a contract to build nine 66kV substations across the kingdom, according to a source.

    The project is estimated to be worth $110m and is intended to support rising electricity demand from Bahrain’s domestic, commercial and industrial sectors.

    Four local contractors submitted commercial bids for the contract in January. The bidders were:

    • Nass Contracting ($28.4m)
    • Poullaides Construction Company ($31.7m)
    • Mohammed Jalal Contracting ($32.4m)
    • Al-Kooheji Electrical ($34m)

    The substations will be located at South Hidd Industrial, Mondelez, Alba Downstream Park, Muharraq North, Hamala West, Bani Jamra, Hoora, Maqabah East and West Riffa Club.

    The scope includes the construction of the nine substations and control rooms, as well as the installation of transformers, switchgear and feeders connecting the facilities to the grid.

    It also covers communication cabling, monitoring systems, safety and security systems, and associated civil and structural works.

    As MEED understands, the substations are scheduled to be commissioned in stages. Two are planned for 2026, followed by four in 2027 and the remaining three in 2028.

    Serbia’s Energoprojekt Entel was appointed as consultant for the project in April 2025. The consultant’s contract was valued at about $460,000.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17834380/main.jpg
    Mark Dowdall
  • CB&I’s newly acquired unit wins Abu Dhabi wells contract

    30 July 2026

    US-based Chicago Bridge & Iron (CB&I) has announced that its Asset Solutions business – acquired earlier this year from UK-headquartered contractor Petrofac – has won a hydrocarbon well services contract in Abu Dhabi.

    The contract was awarded by Cosmo E&P Albahriya, a wholly owned UAE-based subsidiary of Japan’s Cosmo Energy Holdings Company (Cosmo).

    Under the well engineering services contract, CB&I Asset Solutions will support drilling, engineering, planning and operational activities for offshore Block 4 in Abu Dhabi.

    Cosmo secured 100% exploration rights for offshore Block 4 – covering 4,865 square kilometres of Gulf waters northwest of Abu Dhabi city – in February 2021.

    The block was offered in Abu Dhabi’s second hydrocarbons block competitive bidding round, launched by Abu Dhabi National Oil Company (Adnoc) in May 2019.

    “The award strengthens Asset Solutions’ position in the Middle East and solidifies new relationships with key regional operators. With shared goals of prioritising safe, stable and environmentally conscious production, CB&I’s UAE-based team will draw on its local and global experience of delivering innovative well engineering solutions,” the Texas-based CB&I said in a statement.

    ALSO READ: Abu Dhabi awards production licences for hydrocarbon blocks

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17834142/main4710.jpg
    Indrajit Sen