The UAE plans to lower the oil sector’s contribution to GDP to 20 per cent by 2025 from about a third at present by increasing the services and industry sectors, an economy ministry official said yesterday.
“We hope in the next 10 years to lower the oil sector’s contribution to the GDP through economic diversification and the development of important sectors, such as the services sector and the industrial sector through their greater contribution to the GDP,” said Abdullah Al Saleh, undersecretary of the Ministry of Economy.
“The oil price slump will encourage the UAE to be determined to diversify the economy.”
One plank of the diversification policy is to increase the contribution of the industrial sector to GDP to 20 per cent by 2025 from 14 per cent now, he added.
The economy will also benefit from investments in aviation, infrastructure and development of small and medium-sized enterprises, he added.
The wider Arabian Gulf region could gain US$17.7 billion if its average diversification matches the OECD level, which is more than three-quarters of entire foreign direct investments in the GCC in 2013, said the consultancy EY in a report.
"Dependence on oil and issues around youth employment are the GCC's biggest economic challenges," said Gerard Gallagher, EY's Middle East and North Africa advisory leader. "With recent oil price volatility, diversification has returned to the top of the GCC agenda."
Sectors that provide the biggest multiplier effect to the economy, where $1 of investment leads to more than $1 of GDP, include transport, financial services, retail and tourism, telecoms and research and development, said Mr Gallagher.
dalsaadi@thenational.ae
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