Abu Dhabi's drive into financial services, property and logistics has helped it to hit targets for oil diversification five years ahead of schedule.
Abu Dhabi achieves non-oil targets five years ahead
Abu Dhabi's drive into financial services, property and logistics has helped it to hit targets for oil diversification five years ahead of schedule, the emirate's Department of Economic Development (DED) says.
But economists said recent swings in oil prices had played a large part in the development of the non-oil sector, and the emirate's ability to repeat the recent pace of growth in that part of the economy was far from certain.
"We've been steadily increasing our non-oil exports and non-oil [now] represents more than 45 per cent of output rather than 40 per cent in 2007, reaching our goal of 2015 for diversification five years in advance," said Mohammed Omar Abdullah, the Under Secretary of the DED.
The price of oil took off in 2007, peaking at US$147.27 (Dh540.75) a barrel in July 2008, allowing for extra oil revenues to flow into the state coffers.
A barrel of Brent crude now trades at about $87 on the ICE, although analysts from JPMorgan said recently the price might rise to as high as $100 a barrel before the end of next year.
Under Abu Dhabi's Vision 2030 plan, non-oil output should account for 64 per cent of GDP within the next 20 years.
As part of these efforts, Mr Abdullah announced the creation of an innovation centre, which the DED would use to develop links between universities and research centres in the capital to attract foreign investment.
"The innovation centre will encourage and will pave the way towards establishing a knowledge-based economy," he said. "This is where our efforts will focus, on the coordination with the Education Council in terms of developing the education system.
"Most of what we're talking about with these developments requires highly skilled labour. To enable us to have the right people to get the right productivity in our economy, we have to support innovation."
The innovation centre will join the recently announced Investment Promotion Agency (IPA), which will be dedicated to attracting foreign and domestic investment in the region.
The UAE also announced the creation of an Export Credit Agency last month, to provide incentives to local companies looking to export to overseas markets.
Mr Abdullah said he expected all three to launch in the first half of next year.
Peter Crossman, assistant director general at the Statistics Centre - Abu Dhabi, said the emirate's non-oil output had now drawn level with the oil and gas sector this year.
"It's a myth to say this is an oil-based economy," Mr Crossman said. "You only need to look outside to the infrastructure and business developments to see that."
But Mohamed al Azdi, the chief executive of Abu Dhabi National Chemicals Company, or ChemaWEyaat, disagreed: "It's easy to talk about GDP without oil but it's difficult to talk about the economy without oil.
"In Saudi Arabia, each job in the oil sector creates seven or eight more, whether in schools, medical treatment or laundry."
One economist at a bank in Dubai, however, who asked not to be identified, agreed hydrocarbons would remain a vital part of the UAE's economy for some time to come.
"The non-oil and gas sector relies on the liquidity provided to the broader economy through the oil and gas sector," he said.