Business & Economy
Abu Dhabi Government Aims to Boost Economy Amid Covid-19 Pandemic
There are two major challenges that the Abu Dhabi government is currently facing, in the post-pandemic market which includes supporting businesses that are currently operating in Abu Dhabi and promoting the Emirate as an investment destination despite the lockdowns and restrictions that have been placed due to the Covid-19 outbreak. Nevertheless, Abu Dhabi has taken agile and effective actions to address these challenges.
The government allocated AED 3 billion (USD 816.8 million) credit guarantee scheme to Small and Medium-sized Enterprises (SMEs) through the Ghadan 21 Accelerator Programme and introduced several relief funds, subsidies and waivers to support the businesses in Abu Dhabi. The swift response to the pandemic from authorities, residents and businesses, provided the Abu Dhabi Investment Office (ADIO) an opportunity to showcase the resilience of the local economy and society.
Abu Dhabi Investment Office Initiatives
Along with the financial incentives and public incentives deployed under the Ghadan 21 Accelerator Programme, the role of ADIO and other organizations working towards economic development is to identify gaps and opportunities in the business ecosystem and to connect people from the public and private sectors, and across different industries. Abu Dhabi is currently focusing on improving areas that collide with the interest of national security, development priorities and the competitive advantages found in Emirate.
Some of its major focus includes innovation in agriculture, ICT (Information & Communications Technology), financial services, health and biopharmaceuticals, and tourism. Transformation in these fields is being boosted by ADIO’s AgTech Incentive Programme, launched in 2020, with ADIO providing competitive financial and non-financial support to innovative businesses that allow them to deliver impactful solutions. Success in these sectors will contribute to economic diversification and increase the trade activity in Abu Dhabi.
Likewise, Abu Dhabi is fostering the public-private partnership (PPP) which was formalized in 2020, considering the commercial and financial impact that the partnership will have on the economy. The PPP framework will have more focus on sustainability rather than the return on investment, making sure that the parties involved in this partnership generate social dividends in terms of contributing to sovereign wealth, providing an efficient and effective service for citizens, and ensuring environmental sustainability.
Creating Sustainable Business Environment
The investors are confident in the government’s commitment in providing an effective environment for the businesses to grow in terms of infrastructure, safety, subsidies and other waivers. On the other hand, the UAE government has also provided a clear path to acquiring UAE citizenship for international investors who excel at investing in key sectors. With an eye to the future, Abu Dhabi’s development strategy continues to focus on inclusive growth, with a particular attention on expanding opportunities for younger generations.
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New AED 30 Billion Strategic Programme to Boost the UAE Economy
H. H. Sheikh Mohammed, VP & PM of UAE and Ruler of Dubai, recently announced a new strategic programme to boost vital sectors in the country. The initiative includes AED 30 billion (USD 8.17 billion) provided by the Emirates Development Bank (EDB) to finance the start-ups and SMEs (Small & Medium Enterprises) over the next five years to support the UAE’s efforts on exponentially increasing the size of the industrial sector in the coming decade. The funds provided by EDB will help create and support 13,500 new companies across various sectors and generate more than 25,000 jobs. Some of the major industries that will be funded through EDB are health care, infrastructure, food security and technology.
Emirates Development Bank Strategy
The EDB strategy was formulated by conducting several workshops, arranging meetings and discussions with more than 200 stakeholders across various sectors in the federal, local and private sectors to help to create its new strategy to boost manufacturing. The EDB strategy will help to hasten industrial development and the adoption of advanced technology while its funds will support entrepreneurs, start-ups and SMEs. Apart from the financial assistance, the strategy will also provide supply chain support, project finance, long-term finance, business accelerators, equity capital finance and a business growth support fund. The EDB will establish partnerships with UAE lenders to extend financial services to Small and Medium industrial companies and increase its direct financing by 73% in 2021.
More than 90% of the industrial enterprises that are currently operating in the UAE, are small and medium-sized businesses which are considered to be the backbone of the UAE economy. The EDB strategy will support in creating more than 13,500 new SMEs in the country, which will have a significant impact on economic growth, as they are the major drivers of shaping a productive industrial sector and sustainable economy. The volume of spending on Research and Development in the industrial sector will increase from AED 21 billion (USD 5 billion), which is approximately 1.3% of the GDP (Gross Domestic Product), to AED 57 billion (USD 15.5 billion) in 2031, bringing the contribution to the GDP to 2%.
Investment Opportunities in UAE
The government has taken several measures to control the Covid-19 outbreak and accelerate the pace of economic recovery. Some of the major initiatives taken by the government include providing UAE citizenship, 100% ownership of the businesses, extension of freeze on government fees to support the local economy and businesses. The futuristic strategies planned by the government, reflects the government’s supportive and investor-friendly environment which will continue even beyond Expo 2020. Even though the Expo will end on March 31, 2022, the investors and businesses that are operating in Dubai will continue to benefit from these supportive measures till early 2023.
April 9, 2021
Operation 300 billion – Focus on Sustainable National Economy
HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, has launched the Industrial Strategy “Operation 300 billion”, a 10-year comprehensive strategy that aims to empower and expand the industrial sector to become the driving force of a sustainable national economy, increasing its contribution to the GDP from the current AED133 billion (USD 36.2 billion) in 2021 to AED 300 billion (USD 81.6 billion) by 2031. The Ministry of Industry and Advanced Technology will lead the strategy comprising of programmes and initiatives to support 13,500 industrial Small and Medium Enterprises (SMEs).
The strategy will focus primarily on future industries that implement advanced technology and the Fourth Industrial Revolution (4IR) solutions and applications. It aims to increase the value of these industries through improving and promoting local products on a global level and building an attractive business environment for local and international investors to improve their productivity. The strategy will also provide facilities and incentives for the industrial SMEs with an aim of positioning the UAE as a global industrial hub and attract Foreign Direct Investors (FDIs), talents and experts from across the world. These initiatives are expected to contribute towards advancing the national economy and sustainable development of the country.
Operation 300 Billion – Objectives
The initiative has four major objectives. The first objective will offer financing facilities to priority industrial sectors, develop industrial quality infrastructure to support existing and new local industries. The second objective is to capitalize on the industrial development and stimulate the national economy through launching a programme to enhance the value and demand for UAE products with the aim of boosting their contribution to the GDP, increasing their exports and finding new markets for them. The third objective is to encourage innovation and the adoption of advanced technology and solutions. The fourth objective is to create strong foundations to enhance the UAE’s position as a leading global hub for both business and technology.
The “Operation 300 billion”, also comprises of a new initiative, that Unifies Industrial Brands under the slogan ‘Make it in the Emirates’. Under the new initiative, the brands that are manufactured will be distinct and have a unique identity by enhancing their quality and global competitiveness. Ultimately, every product made in UAE will comply with the highest international quality standards and have its rightful place among the best international products. The industrial strategy will achieve a giant leap in the UAE’s industrial sector to become the main driving force of the national economy and paving the way for the next 50 years.
Implications of Operations 300 Billion to Economy
There are more than 33,000 industrial enterprises that are currently operating in the UAE, among which more than 95% of the enterprises are small and medium-sized businesses. SMEs are considered to be the backbone of the UAE. The Operation 300 billion strategy will support more than 13,500 SMEs by 2031, as they are major drivers of shaping a productive industrial sector and sustainable economy. The volume of spending on Research and Development in the industrial sector will increase from AED 21 billion (USD 5 billion), which is approximately 1.3% of the GDP, to AED 57 billion (USD 15.5 billion) in 2031, bringing the contribution to the GDP to 2%.
Investment Opportunities in UAE
The government has taken several measures to control the Covid-19 and accelerate the pace of economic recovery. Some of the other major initiatives apart from Operation 300 billion include providing UAE citizenship, 100% ownership of the businesses, extension of freeze on government fees to support the local economy and businesses. The futuristic strategies planned by the government, reflects the government’s supportive and investor-friendly environment which will continue even beyond Expo 2020. Even though the Expo will end on March 31, 2022, the investors and businesses that are operating in Dubai will continue to benefit from these supportive measures till early 2023.
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Dubai Urban Master Plan 2040
In order to further enhance Dubai’s appeal to investors, visitors and residents, Dubai has launched the 2040 Urban Master Plan, a roadmap for sustainable urban development in the city. The masterplan was designed by H.H. Sheikh Mohammed bin Rashid Al Maktoum, V.P. and P.M. of the UAE and Ruler of Dubai. The plan focuses on using the available spaces within the city limits and concentrates on development in existing urban areas.
The major focus of Dubai 2040 urban master plan is to develop the five urban centres namely Deira & Bur Dubai, Marina & JBR, Business Bay & Dubai Downtown and Expo 2020 Centre & Dubai Silicon Oasis Centre. Initiatives such as infrastructure development and new property development will be carried out raising Dubai’s reputation globally as a business and financial hub. Furthermore, the implementation of 2040 Master Plan will strengthen Dubai’s resilience toward global challenges.
Impact of Dubai 2040 Urban Master Plan – Tourism & Hospitality
It is estimated that Dubai’s population is set to reach 5.8 million by 2040 from 3.4 million in 2021, and the 2040 urban masterplan will provide the groundwork for how the city can grow sustainably over the next 20 years, accommodating the needs of the growing population. Under the plan, the land area used for hotels and tourist activities will increase by 134%, while the land used for commercial activities will increase to 168 Sq. kms.
While Dubai will continue to be a global hub for innovative start-ups, international corporations and an ideal platform for Foreign Direct Investments (FDI), the master plan will also increase the land area allocated to education and health facilities by 25%, while the length of public beaches will increase by as much as 400% in 2040. Easily accessible integrated service centres will be established across Dubai while the plan also seeks to raise the quality of life of the city while increasing population densities around key transit facilities.
Investment Opportunities in Dubai
The people-centric plan focuses on reinforcing Dubai’s competitiveness as a global destination for investment, by providing a wide diversity of lifestyle and investment opportunities for citizens, residents, visitors and addressing all their growing needs over the next 20 years. It will also enhance Dubai’s investment appeal and attract fresh investments into all the sectors. The plan will help raise the Emirate’s growing role as a pivotal business and trade hub, enhancing its attractiveness as an investment destination by leveraging its superior logistics infrastructure, including some of the world’s best ports and airports and maximising its ability to harness the vast talent pool available. The new master plan will help strengthen Dubai’s efforts to mitigate the repercussions of the Covid-19 pandemic, accelerate the pace of its economic recovery and prepare the ground for a bright new post-pandemic world.
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UAE Foreign Exchange Industry Experts Positive of Economic Recovery in 2021
The year 2020 saw a drop in remittances value by 10-15%, because of the Covid-19 pandemic. Despite the drop in remittances value by 10-15% in 2020, the UAE’s foreign exchange industry executives remain confident in recovery mainly due to the increase in economic activity, Covid-19 management by the government and the return of expat workers to the UAE being the major contributing factors for the increase in remittance flows.
UAE Foreign Exchange Industry Experts View
Joyalukkas Exchange – Antony Jos, MD – Joyalukkas Exchange & Treasurer at the Foreign Exchange and Remittance Group (FERG), expects growth in remittances this year on the back of a strong rebound in the economy, strong vaccination drive, firmer oil prices, Expo 2020 Dubai and the opening up of the Israel market to UAE businesses.
Lulu Financial Holdings – Adeeb Ahamed – MD Lulu Financial Holdings said that the outlook for UAE remittances is positive for 2021 and the Lulu Group remains bullish in their views for the remittance and foreign exchange business. Ahamed said a revival of the economic activity will be a huge boost to the business along with Covid-19 management by the UAE government, the return of expat workers to the UAE and better job opportunities which will influence the remittance flows.
Al Ghurair International Exchange – Imad Ul Malik, GM – Al Ghurair International Exchange & Joint Treasurer at FERG said that remittances from the UAE are expected to grow in 2021 as a result of the vaccination drive and opening up of the leisure and travel industry. Likewise, the opening of the leisure and travel industry is also an indication of the increased confidence in getting back to normality. The upcoming Expo 2020 will also reflect directly on the remittance industry in a positive manner.
Orient Exchange – Rajiv Raipancholia, CEO – Orient Exchange, said there is uncertainty on the outlook and does not expect a return to pre-pandemic levels this year. However, he stated that if more projects were launched this year, there will be demand for more migrant workers, which would lead to a bullish outlook for remittances.
UAE Coronavirus Cases Decreasing
UAE was seeing a gradual decrease in the infection rates, as 52.46% of the population has received the Covid-19 vaccine according to the National Emergency Crisis and Disaster Management Authority (NCEMA) which is a positive sign and a step to recovery and resuming normal life in the country. Daily Covid-19 cases in the UAE dipped below 2,000 for the first time in more than two months, with 1,898 new cases reported on March 15.
UAE Economic Recovery 2021 Strategy
The post-COVID 19 will give rise to new business patterns with governments playing a key role in the national economy, leading to substantial investments in digital infrastructure, 5G networks, Smart Cities & Services, health, education and trade.
The measures taken by the government to control the Covid-19 and vaccinate against the population, will accelerate the pace of economic recovery by increasing the willingness of international investors to visit the Emirates. Furthermore, Dubai extended the freeze on government fees to support the local economy and businesses. The decisions taken by the Dubai government, reflects the government’s supportive and investor-friendly environment which will continue even beyond Expo 2020. Even though the Expo will end on March 31, 2022, the investors and businesses that are operating in Dubai will continue to benefit from these supportive measures till early 2023.
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Abu Dhabi Targets Innovative Companies with AED 2bn Investment Programme
Last year, Abu Dhabi’s Investment Office planned to provide financial and non-financial incentive programmes with an estimated value of AED 2 billion (USD 450 million) from 2021 onwards, targeting innovative companies in high growth areas. Through this innovation programme, Abu Dhabi aims to show the world that it is open for business and is committed to entrepreneurship.
Despite the funds from the innovation program being focused on all the sectors of the economy, the primary emphasis will be to allocate funds for start-ups, entrepreneurs, as well as SMEs (Small Medium Size Enterprise). The program will also provide non-financial incentives such as consulting services, connect the companies to potential revenue streams and provide them with opportunities to look at policy and how they may be able to participate in changing policy and regulations.
Abu Dhabi Economic Stimulus Package targeting SMEs
In addition to Abu Dhabi Investment program – 2021, several other initiatives were also introduced to support the startups and SMEs in the Emirate. One of such initiatives is the economic relief scheme which includes 16 Initiatives aimed at reducing the costs of living and supporting businesses in the emirate.
Abu Dhabi’s Department of Finance collaborated with three of the emirate’s top lenders to expand the SME Credit Guarantee Scheme as part of Abu Dhabi’s economic stimulus programme. Under the deal with Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank and First Abu Dhabi Bank, the government will guarantee up to 80% of the value of the credit guarantee scheme to SMEs. Similarly, the investor-friendly initiatives that the government launched in 2020, following the outbreak of the pandemic has had a positive impact on the economic recovery and in the stabilization of the jobs in the Emirate.
Investment Opportunities – Abu Dhabi
With the initiative, Abu Dhabi has shown its commitment in reaching out to international investors to establish their presence in the Emirate. The latest supportive measures taken by the government will accelerate the growth in startups and international investments in Abu Dhabi and contribute to economic recovery. It will also reduce the cost of business operations for the existing companies, providing adequate time for the companies to recover, especially the SMEs in the aftermath of Covid-19 pandemic.
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Dubai Extends the Freeze on Government Fees to Support Local Economy and Businesses
Dubai has extended a three-year freeze currently in place on fees charged for certain government services until 2023, according to an executive order issued by the Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council. The extension of the freeze will help boost Dubai’s competitiveness, improve the confidence and resilience of businesses and eases any financial challenges they may have due to the Covid-19 pandemic. Apart from the extension of the freeze, the government has also mentioned that there will be no new fees imposed on businesses, except in the case of the introduction of new vital services.
Industry specific fee waivers and exemption were also provided by the Dubai government among the initiatives in the latest package, with a primary focus on commercial establishments, hotels as well as the entertainment sectors. In the events sector, the exemption from the fees charged for postponement and cancellation of recreational and sports activities, including conferences and exhibitions, has been extended. The package also extends the freeze on fees charged for ticket sales, issuing permits and other government fees imposed on entertainment and business events.
Dubai Government Support – Private Sectors
In order to support the private sector and combat the impact of the Covid-19 pandemic, the Dubai government has announced measures worth AED 7.1 billion (USD 2 billion) for the past one year. The investor-friendly initiatives that the government launched early last year following the outbreak of the pandemic has had a positive impact on the economic recovery and in the stabilization of the jobs in the Emirate. Except for the travel and tourism industry, almost all the other sectors have either been stabilising or steadily recovering over the last few months. Industry experts have revealed that the business conditions in Dubai continue to strengthen with output and employment numbers increasing amid growing confidence among firms for a strong economic recovery in 2021. The successful roll-out of Covid-19 vaccines in Dubai has also contributed to the increase in optimism for growth in business activity over the coming year.
Investment Opportunities – Dubai & UAE
The latest supportive measures taken by the government will accelerate the pace of economic recovery and also reduce the cost of business operations, providing adequate time for the companies to recover, especially in the Small and Medium Enterprises (SMEs) which needed support from the public sector to overcome the impact of pandemic. The decisions taken by the Dubai government, reflects the government’s supportive and investor-friendly environment which will continue even beyond Expo 2020. Even though the Expo will end on March 31, 2022, the investors and businesses that are operating in Dubai will continue to benefit from these supportive measures till early 2023.
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March 15, 2021
Abu Dhabi Government Support for SMEs demonstrates their importance to UAE
Last year, the government of Abu Dhabi announced that they would allocate 15% of annual procurement spending and contracts to micro, small and medium enterprises (mSMEs) to increase the segment growth rate and offset the impact of the Covid-19 pandemic on the mSME sector. The primary goal of the initiative was to drive the growth of small businesses in Abu Dhabi as they are considered to be the backbone of the economy. Several other measures were also taken to help the mSMEs including the suspension of bid bonds and waivers of performance guarantees for projects worth up to AED 50 billion (USD 13.5 billion), which will be introduced from 2021 for mSMEs and Emirati entrepreneurs.
Economic Stimulus Package – SMEs
Small and Medium Enterprises (SMEs) are a key component for Abu Dhabi’s business landscape as they account for more than 98% of the companies in the Emirate. They contribute approximately 29% of the Gross Domestic Product (GDP) and 44% of the non-oil economy. Therefore, the government aims to roll out an economic stimulus package to help soften the impact of the coronavirus on the SMEs and the economy.
The economic relief scheme includes 16 initiatives aimed at reducing the costs of living and supporting businesses in the emirate. Abu Dhabi’s Department of Finance collaborated with three of the emirate’s top lenders to expand the SME Credit Guarantee Scheme introduced as part of Abu Dhabi’s economic stimulus. Under the deal with Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank and First Abu Dhabi Bank, the government will guarantee up to 80% of the value of the credit guarantee scheme to SMEs.
The initiative provides SMEs with wider access to renewable financing options for working capital loans for a three-month duration and term loans for up to four-year duration to support further investment in Abu Dhabi. The UAE, also provided AED 282 billion (USD 77 billion) monetary support for the SMEs, providing zero interest funding to banks to boost lending growth in the country. Various other initiatives such as discounted utility bills and waivers of fees to support the economy were also taken.
Investment opportunities in Abu Dhabi
The Lenders in UAE have already provided a comprehensive package to reduce financial distress of SMEs that are operating in the country, through reduced costs and fees, loan deferrals and reduced interest rates and processing fees. UAE Central Bank (CBUAE) urged lenders to support their private sector clients and individual borrowers to cushion the impact of Covid-19. The CBUAE has released 60% of AED 50 billion (USD 14.5 billion) Targeted Economic Support Scheme. Abu Dhabi and UAE will continue to support the SMEs and mSMEs that are operating in the Emirates creating a mutually beneficial platform for the economy and the businesses.
March 12, 2021
Dubai Schools – A New School Model
In the recent meeting organized at the Executive Council at the Dubai Police Academy, Sheikh Hamdan launched ‘Dubai Schools’, a new school model that provides an innovative school model offering high-quality education at an affordable cost. The project also creates a new Emirati schooling system that provides a high standard of education rooted in national values. While preparing students for the requirements of the future job market, the new school model also seeks to deepen their Emirati, Arab and Muslim identity.
The new school model that will enrich Dubai’s educational system by providing necessary knowledge to develop individuals that are nationally rooted and globally competent. The new initiative, which integrates a global curriculum, will contribute in developing the educational and life skills of students with a focus on Emiratis values and the Arabic language. The new model is designed to prepare students to lead and innovate and make valuable contributions to building the nation’s future.
New Affordable Private Schools
As a part of the educational strategy, the Dubai government has planned to open two new affordable schools to be run by a private sector operator under a new model for the city. The schools will be located in Mirdif and Al Barsha, and will be operational on August 29 2021. Both schools will follow the American curriculum but will focus on Arabic literacy, science and technology, the UAE’s culture and Islamic studies.
The schools will be operated by Taaleem, one of the country’s top education providers, and will be regulated by the Knowledge and Human Development Authority (KHDA), Dubai’s private education regulator. The school will be open for students of all abilities and nationalities. Currently, more than 400 families have expressed interest in seeking admission in these schools, while it can accommodate 800 children. Initially the school will be open for preschool to Grade 4. The annual fees for the students will vary from AED 29,900 (USD 8,140) for kindergarten students to AED 36,155 (USD 9,832) for fourth-graders. These two new schools are expected to raise the educational standards in the region.
Dubai Education System
Dubai has strongly believed that developing human capital will be a key to shape a bright future for the country and its citizens. As part of the vision of VP. and PM. of the UAE and Ruler of Dubai, H.H. Sheikh Mohammed, Dubai has invested in quality education to create a future for the country that is driven by scientific curiosity, knowledge, innovation, collaboration and national values. Dubai Government strives to create an ideal platform for a modern globally recognized education to thrive in the Emirate.
Investment Opportunities in Dubai’s Education & K-12 Sector
Dubai will continue to improve its infrastructure, offering a pioneer quality of life and unparalleled business environment for residents and visitors alike. Various government initiatives pertaining to the education sector will continue to make Dubai and UAE an attractive destination for setting up educational institutes in the Emirate.
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Abu Dhabi – Economic Overview
Abu Dhabi is considered the wealthiest emirate in UAE, in terms of per capita income and Gross Domestic Product (GDP). The estimated GDP for the year 2020 was approximately AED 1.47 trillion (USD 401 billion) which contracted by 7.5% compared to the previous year, because of the low oil production and COVID19 outbreak. The GDP Per Capita for the same period accounted for AED 160,000 (USD 43,005). The economy is expected to grow at a rate of 2.2% between 2021-2023. The oil and gas sector is the primary source of Abu Dhabi’s GDP contributing to more than 40% of the overall value. However, with the economic diversification strategies of the UAE government and its initiatives to boost the development of the Emirate’s non-oil and gas sector, is gradually lowering the dependency on oil & gas.
Abu Dhabi injected approximately AED 50 billion (USD 14 billion) to support small local businesses, research and development, tourism and entertainment industries to increase the GDP contribution of the non-oil & gas sector. The government aims to boost the private sector’s contribution to Abu Dhabi’s GDP from 32% in 2019 to 37% in 2021. In 2030, the emirate aims to have a sustainable economy that is not dependent on the oil and gas sector.
Abu Dhabi – COVID19 Implications
Due to the Covid-19 outbreak, 2020 was an extremely challenging year for Abu Dhabi. Experts forecasted a decrease in GDP by 3-4% in the forthcoming years. Despite this, the economy of Abu Dhabi has already started to recover from the pandemic thanks to an economic stimulus package launched by the government to ensure that Abu Dhabi’s economic diversification goals are achieved and the impact of the corona-virus outbreak on citizens and businesses were substantially lowered.
Investment Opportunities in Abu Dhabi
This Abu Dhabi government is quite optimistic about its economic growth in the forthcoming years. They predict that Abu Dhabi’s economy will grow at the level of 6-8% in 2021 and 2022, as a result of foreign investment, government spending, the oil price rebound and activities within the financial services. Furthermore, the emirate is planning to invest in advanced technology, such as e-commerce and artificial intelligence, since Abu Dhabi is positioning itself as a tech hub and attracting companies in healthcare, agricultural technology, and renewable energy sectors which are considered to be crucial for the emirate’s economic growth.
Abu Dhabi provides excellent opportunities for foreign investors and multinational companies across healthcare, renewable energy and agricultural technology companies to enter and establish their business in the Emirate.
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