The UAE's economy is thriving and is expected to grow by 4% in 2024, driven by rapid expansion in the country's non-oil sectors, including real estate, construction, wholesale trade, financial services, and tourism. Several factors contribute to this economic growth, such as the increasing influx of tourists, supportive government policies, and technological advancements. Initiatives like Dubai's 10-year economic plan, aimed at doubling the size of the economy and establishing the city as one of the leading global financial hubs, play a significant role in the UAE's economic expansion. Let's explore some of the key industries in the UAE that are contributing to economic growth.
Growing Industries to Start a Business in UAE
The UAE is a dynamic and diverse country that offers a wide range of opportunities for entrepreneurs and investors. Whether you are looking for a new market, a strategic location, or a supportive environment, the UAE has something to offer. Here are some of the leading industries to start a business in the UAE:
- Retail
The retail industry has been steadily growing, owing to the presence of many global retailers in the country. Consumers increasingly prefer quality over price, which has resulted in a rise in their spending capacity. The retail market size of the country was approximately AED 306 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 5% by 2027. The growth of this industry is fueled by the rising per capita income, an influx of expatriates with higher disposable income, and new retail construction projects that provide opportunities for retailers to flourish in the country.
- Construction
The construction industry is one of the major contributors to the UAE's economic growth. It has been exhibiting steady growth for the past few years and is expected to achieve a CAGR of 3.9% from 2024 to 2027. Investments in diverse areas such as infrastructure, housing, oil and gas, renewable energy, industrial, and tourism projects are key factors supporting the growth of the construction industry in the UAE. The country is attracting more foreign investors with its liberal trade policies to boost the construction industry. The presence of significant global players makes the construction market extremely competitive, which provides immense opportunities to drive economic expansion in the coming years.
- Healthcare
The UAE boasts a well-developed healthcare system that ranks among the best in the world. The country is committed to granting its population access to high-quality healthcare services. With state-of-the-art infrastructure and technology-driven healthcare, the industry is rapidly progressing and has the potential to provide world-class healthcare services to its citizens. The nation's population is projected to reach 11.1 million by 2030, with an expected average life expectancy of 79.8 years. The UAE government also plans to manufacture pharmaceuticals locally to reduce dependency on imports. As the second-largest economy in the GCC, the UAE's pharmaceutical and medical device industry has made significant progress and expansion, contributing to economic growth.
- Tourism
The tourism industry is one of the major contributors to UAE's economic growth. The country's popularity among international travellers plays a key role in the rapid growth of the tourism industry. It is estimated that the travel and tourism sector will contribute approximately AED 280.6 billion to the UAE's GDP by 2028. The tourism industry is one of the strongest pillars of the economy with the potential to create over 114,000 new jobs over the next 10 years. UAE aims to enhance the tourism sector, with a focus on leisure, adventure, and business, to attract more regional and global visitors.
- Real Estate
The real estate sector has achieved remarkable growth in recent years, thanks to various government initiatives aimed at attracting foreign investors and promoting investments in the industry. The investor-friendly policies of the government are enticing entrepreneurs and investors from around the world, offering them the opportunity not only to establish and flourish in their business activities but also to reside in the nation with their families. The increasing number of expatriates and businesspeople in the UAE has led to exponential growth in both the residential and commercial real estate markets. Various government initiatives, visa reforms, and the quality of life in the UAE are attracting foreigners to work and live in the country, resulting in a boost in both the commercial and residential real estate sectors.
- Oil and Gas
The oil and gas industry is the biggest contributor to UAE's economic growth, accounting for 30% of the country’s GDP. The UAE is one of the largest crude oil producers in the world with the capacity to produce around four million barrels of oil a day. A significant portion of the government's revenue comes from the profits from exporting oil and gas. The country recently started exploring unconventional gas resources and has emerged as the newest producer of unconventional gas in 2020. The UAE, which currently relies on Qatar for importing natural gas, aims to achieve self-sufficiency in gas supply by 2030.
- Logistics and Transportation
The logistics and transportation industry is rapidly growing owing to the advancements in infrastructure facilities that include airports, ports, metro networks and roads. The logistics industry contributes to about 14% of the UAE’s GDP and is expected to achieve a CAGR of 8.4% by 2026. The exponential growth of the industry will open up new opportunities and investments to boost its digital infrastructure. The growing e-commerce industry, rising international trade, and the adoption of tech-driven logistics services, positively impact the logistics industry and contribute to market growth. The logistics and transportation industry relies on technologies such as Autonomous Logistics, the Internet of Things (IoT), and Artificial Intelligence to enhance efficiency and streamline operations.
- Consulting
The UAE's consulting market grew by 17% in 2022, making the country the second-biggest market in the GCC region. The delayed expo 2020, which was later held from October 2021 to March 2022, created a golden opportunity for consultants to showcase their strengths. There has been a significant rise in revenue for GCC consultants in the public sector owing to many economic diversification programs established by the government. In the UAE, cybersecurity consulting services are experiencing a rapid growth, while there has been a significant increase in demand for strategy consulting across the GCC. It is also estimated that the GCC consulting market will cross $4 billion in revenue.
- Financial
Compared to other countries in the GCC, banks in the UAE are showcasing excellent performance, and their profitability has also significantly improved. Rising interest rates, high oil prices, and effective control of inflation have contributed to the market growth. The UAE banks have been benefiting from average net interest margins (NIMs), raising rates, and lower-cost business models. Many of the major banks in the UAE are set for greater loan growth and higher profits, thanks to a thriving domestic economy and strong oil prices.
- E-commerce
The e-commerce sector in the UAE has been evolving at a rapid pace for the past few years. Many customers have shifted from physical stores to e-commerce platforms as customer preferences change and technological advancements make shopping more convenient. The reason for the unparalleled growth of e-commerce in the UAE can be attributed to widespread internet usage and smartphones, as well as changing customer behaviors. The steady growth of the e-commerce industry is expected to achieve a CAGR of 11.12% from 2023 to 2027. As more and more consumers are moving towards online shopping post-pandemic, the industry will continue to maintain its growth momentum in the coming years.
Further Reading - Top 10 Successful Business Ideas in Dubai, UAE
Conclusion
The UAE's economic growth is driven not only by the oil and gas industry but also by other sectors, contributing to a projected 4% growth in 2024. The government has also strategically designed several initiatives for long-term economic expansion. The ease of doing business and the introduction of new visas are attracting people from all over the world to UAE to live and work in the country which will further aid the economic growth. With all conditions in favour, the UAE economy has the capacity to outperform its peers in the GCC and emerge as the best-performing economy in 2024.
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