UAE accelerates away from hydrocarbons with record non-oil growth in 2025

The United Arab Emirates appears to be shifting away from hydrocarbons quite significantly in 2025. This change has been fueled by a broad, multi-sector growth that includes trade, manufacturing, finance, and services, officials say this is really reshaping the whole structure of the economy. According to The Arabian Post, non-oil sectors have been the main engine of growth this year, a view supported by both official ministry data and other independent analyses. These sources show that non-oil activities are now contributing a record-high share of the country’s total output.

As reported, non-oil foreign trade increased by 24.5% in the first half of 2025, reaching AED 1.7 trillion. This growth considerably outpaces global trade expansion and reflects stronger re-exports as well as increased demand from regions like Asia, Europe, and Africa. The Ministry of Economy & Tourism highlighted that in Q1 2025, non-oil activity grew by 5.3%, with manufacturing leading at an impressive 7.7%. Finance, insurance, and construction each expanded by 7.0%, while real estate grew 6.6%, and trade by 3.0%. The ministry also indicated that trade accounts for about 15.6% of non-oil GDP, with finance and insurance making up 14.6%, and manufacturing contributing 13.4%.

The sheer scale of non-oil output has definitely attracted some attention. Industry analysts and central estimates show that in Q1 2025, non-oil GDP hit around AED 352 billion, which makes up about 77.3% of the total GDP. This number is echoed across various independent reports and commentaries, including a note from Seed Group and analyses led by economist Nasser Saidi. They estimate that real GDP grew roughly 4.3% year-on-year in Q1, with non-oil expansion closely trailing. These figures really emphasize how services, industry, and construction now form the core of the nation’s economic output.

Trade and logistics have played a really critical role here. The Arabian Post points out that improvements like expanded port capacities, quicker customs procedures, and new trade agreements have all helped propel the growth of re-exports and cross-border trade. Digitization of customs processes and increased use of free-zone infrastructure have also helped shrink clearance times, making the UAE an even more important trans-shipment hub. Experts say that the 24.5% rise in non-oil foreign trade isn’t just because of higher prices but rather a volume-driven growth, pretty encouraging, right?

The manufacturing sector’s performance is especially noteworthy because it lines up with the country’s strategic priorities. Sector reports show manufacturing grew by 7.7% in Q1. Investments have flowed into industries like metals, food processing, pharmaceuticals, and building materials. Abu Dhabi’s authorities reported a nearly 4% growth in their economy in Q2, driven by a 6.1% increase in the non-oil part of their economy. The Abu Dhabi Industrial Strategy has also been credited with a 23% rise in industrial GDP since 2022, and a 19.4% boost in industrial firms, details highlighted by The National.

Of course, policy changes have come hand-in-hand with this positive cycle. As the Arabian Post and government sources suggest, momentum stems from structural reforms, things like relaxed ownership rules, long-term residency options for professionals, and simplified licensing procedures. These reforms have made it easier for foreign firms to set up shop. Special free zones and regulatory easing onshore are attracting industries like logistics, clean energy, advanced manufacturing, fintech, and digital services. Investment data from UNCTAD’s World Investment Report 2025 even ranks the UAE 10th globally for inbound foreign direct investment in 2024, AED167.6 billion, showing strong foreign confidence remains.

Financial services have also been at the heart of this shift. Banks report healthy credit growth toward businesses, and stock exchanges have seen new listings and debt issues. Asset managers and private equity firms are expanding their regional footprints through Dubai and Abu Dhabi. Additionally, clearer regulation around digital assets and fintech has broadened investor participation, the ministry notes. Sector analyses show that wholesale and retail trade, finance, and manufacturing now together make up about a third of GDP, another sign of how diversified the economy is becoming.

Tourism and real estate continue to support this non-oil recovery as well. The Arabian Post notes record hotel occupancy rates and higher visitor spending, driven by better air connectivity and big events. The real estate market has stayed lively across residential, commercial, and industrial segments, with Q1 growth figures between roughly 6.6% and 7.4%, depending on the source.

That said, experts are cautious about whether this momentum can be maintained over the long haul. While external demand from trade and investment flows seems strong, global economic uncertainties and regional geopolitics could influence future export markets and investor confidence. Independent analysts also emphasize that staying competitive will rely heavily on ongoing regulatory clarity, infrastructure spending, and industrial policies aimed at not just relocating firms but developing deep, locally embedded value chains.

All in all, the general picture points toward a conscious economic redirection. The Ministry of Economy & Tourism’s figures suggest that the UAE’s 2025 performance is the result of deliberate policies, mixing incentives, legal reforms, and infrastructure upgrades, to make non-oil sectors the main drivers of growth. If these trends continue, 2025 might be remembered not just for its impressive headline numbers but also for a faster, more profound shift in the country’s economic foundation, one where trade, manufacturing, finance, and services form a resilient, long-term backbone.

Source: Noah Wire Services