UAE Oil-Free Growth Reaches Peak: Q1 GDP Jumps 3.9%

The UAE’s non-oil sector has reached an unprecedented milestone that marks a turning point in the country’s economic history. Non-oil economic activities now make up 77.3% of the UAE’s real GDP during 2025’s first quarter, which showcases the nation’s successful diversification strategy. The country achieved a 3.9% growth in real GDP, reaching Dh455 billion ($123.89 billion), while its non-oil GDP substantially expanded by 5.3% to Dh352 billion.

These impressive growth figures demonstrate UAE’s successful shift away from its traditional reliance on oil reserves and production. The economy has proven remarkably resilient despite global oil export fluctuations. Oil-related activities represent only 22.7% of the total GDP[-4], which shows the country’s expanding revenue streams beyond the energy sector. The nation’s economic landscape continues to evolve toward a knowledge-based, innovation-driven future that builds on more than just oil foundations.

UAE Achieves Record 77.3% Non-Oil GDP Contribution

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“Thanks to the directives of the wise leadership, the contribution of non-oil activities to real GDP reached a record 77.3 per cent in the first quarter – the highest in the country’s history. This reflects the strong momentum of the UAE’s economic diversification drive and underscores the effectiveness of national policies and strategies aimed at building an economic model based on knowledge and innovation, in line with the objectives of the ‘We the UAE 2031’ vision, which seeks to raise the country’s GDP to AED 3 trillion by the next decade.” — Abdulla bin Touq Al Marri, UAE Minister of Economy and Tourism

Q1 2025 represents a defining moment in UAE’s economic diversification experience. The Federal Competitiveness and Statistics Center’s preliminary estimates show non-oil economic activities now make up 77.3% of the country’s real GDP. This achievement marks a crucial step toward reducing dependence on traditional **uae oil production** and **uae oil exports**.

The non-oil GDP grew strongly by 5.3% to AED 352 billion, while oil-related activities factored in just 22.7% of total economic output. This shift demonstrates steady progress from 2020’s non-oil contribution of 71.3%.

The Minister of Economy and Tourism, Abdullah bin Touq, highlighted that these figures demonstrate the “strength and resilience of the national economy and knowing how to continue its exceptional growth experience”. The minister credited this success to government economic strategies that focus on building a knowledge- and innovation-based economy that arranges with the “We the UAE 2031” vision.

The Federal Competitiveness and Statistics Center’s Managing Director, Hanan Mansour Ahli, confirmed the UAE’s economic model’s efficiency. The country’s growth path shows its commitment to building a diverse economy that reduces dependence on uae oil reserves while fostering business, talent, and innovation.

Manufacturing and Finance Lead Sectoral Growth

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“The manufacturing sector led all economic activities in terms of growth, registering a 7.7 percent increase, followed by finance, insurance, and construction sectors, each growing by 7 percent.” — Xinhua Editorial, Official Chinese state news agency

The UAE’s Q1 2025 data shows manufacturing leading the country’s economic diversification efforts, reducing dependence on uae oil. The sector grew by 7.7% compared to last year, making it the strongest performer. This growth indicates the sector’s vital role in moving away from uae oil production.

The finance and insurance sectors grew by 7.0%, matching construction’s pace. Real estate activities saw a 6.6% increase while trade activities expanded by 3.0%. These numbers reflect healthy growth in different parts of the economy.

Trade remains the biggest contributor to non-oil GDP at 15.6%. Finance and insurance come second with 14.6%, while manufacturing contributes 13.4%. Construction and real estate activities make up 12.0% and 7.4% respectively.

Abu Dhabi’s manufacturing sector created AED28.5 billion in value added, with a 5% year-on-year growth. New industrial licenses went up by 4.7%, and factories moving from construction to production stage jumped by 65%.

The emirate’s finance sector performed exceptionally well with 9.1% growth, generating AED19.6 billion in value. Abu Dhabi Global Market saw its registered financial institutions increase by 43%, while assets under management grew by 33%.

National Vision and Policy Drive Economic Diversification

_{Image Source: UAE Embassy in Washington, DC}

The UAE has anchored its state-of-the-art pivot from uae oil dependency in the complete “We the UAE 2031” vision that outlines ambitious targets to reinforce economic diversification. This national framework wants to double the country’s GDP from AED 1.49 trillion to AED 3 trillion, generate AED 800 billion in non-oil exports, and expand the tourism sector’s contribution to AED 450 billion by the next decade.

The country’s transformation from a conventional, labor-intensive economy to one built on knowledge, technology, and skilled labor supports these targets. The UAE’s economic diversification efforts have achieved impressive results, with non-oil activities contributing a historic 77.3% to real GDP in Q1 2025.

These achievements highlight “the effectiveness of national policies and strategies aimed at building an economic model based on knowledge and innovation,” according to Abdullah bin Touq Al Marri, Minister of Economy and Tourism. The UAE has launched strategic initiatives like the Knowledge and Innovation Hub that strengthen strategic collaborations with academic institutions in economic policy research.

Al Marri projects 5-6% growth in 2025 for UAE’s promising economic outlook. We focused on technology, renewable energy, trade, financial services, and infrastructure sectors. This positive trajectory shows successful implementation of the leadership’s directives to develop economic sectors on environmentally responsible foundations.

UAE’s economy reached a watershed moment based on Q1 2025 data. The record 77.3% contribution of non-oil activities to real GDP marks the success of years of strategic economic diversification efforts. This change from oil dependency proves the national economy’s resilience and adaptability despite global market fluctuations.

The non-oil GDP grew by 5.3% while the overall economy expanded by 3.9%, which shows how government policies have improved sustainable development. Manufacturing sector’s impressive 7.7% growth rate proves that UAE industries can succeed beyond traditional energy markets. Strong results in finance, insurance, and construction reflect balanced growth across multiple economic segments.

UAE stands at a crucial point in its economic development. The change from an oil-dependent economy to one powered by knowledge, innovation, and technology means more than just statistical growth—it represents a complete transformation of UAE’s economic identity. “We the UAE 2031” vision’s strategic goals strengthen this commitment to sustainable economic progress.

Without doubt, challenges exist on this path of economic transformation. In spite of that, the current direction shows that UAE has not only managed global market uncertainties but has grown stronger through diversification. The significant drop in oil dependency puts the nation in a favorable position whatever the oil price volatility.

UAE proves how economic diversification can succeed in a region where hydrocarbon exports traditionally dominated. The country moves closer to its vision of building a knowledge-based economy on innovation rather than natural resources as non-oil sectors continue to grow.