Will the UAE grow non-oil foreign trade to AED 4trn four years early?

Business Recorder

2 days ago

The UAE - which for years has actively tried to diversify its economy away from oil - recently announced that its goal to grow non-oil foreign trade to AED 4 trillion by 2031 will be achieved within two years, four years ahead of schedule.
In a statement, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, said the nation's 'booming non-oil foreign trade' is at the heart of its growth, 'achieving consistent record-breaking growth for several years.'
But the question is: how realistic is this ambitious target?
The numbers are certainly promising: the country's non-oil trade in goods touched a record AED3 trillion dirhams in 2024, up 14.6% from the previous year.
Non-oil foreign trade saw growth of 18.6% year-on-year in the first quarter of this year - compared to a global average of 2% to 3%, according to the government - reaching AED835 billion.
'This growth rate, if sustained, would comfortably exceed the approximately 10.1% compound annual growth needed to bridge the gap from AED 3 trillion in 2024 to AED 4 trillion by 2027,' Joseph Dahrieh, Managing Principal at forex broker Tickmill, told Business Recorder.
Non-oil economic activities that contributed most to the country's GDP included the trade sector; the manufacturing sector; financial and insurance; construction and building as well as real estate.
Non-oil exports continued to achieve 'historical growth rates', recording AED 177.3 billion in Q1 2025, a 40.7% year-on-year increase and a 15.7% quarter-on-quarter increase.
This growth pushed non-oil exports to over 21% of the UAE's total non-oil foreign trade for the first time in the nation's history, according to the government's statement, outpacing the growth of both imports and re-exports.
Meanwhile re-exports saw a 6% annual increase, reaching AED 189.1 billion. Imports grew by 17.2% year-on-year, reaching AED 468.6 billion, but experienced a slight 1.7% decline compared to the previous quarter (Q4 of 2024).
Trade with the country's top 10 trading partners continued to expand, growing by 20.2% in Q1 2025, compared to 16.9% growth with other countries.
Sheikh Mohammed said that the UAE's economic growth is 'achieving unprecedented success' with indicators of social, economic, and strategic stability and prosperity at their highest historical levels.
According to Dahrieh, the UAE's confidence 'stems from the nation's exceptional recent performance and a multi-faceted strategic approach.'
He added that the recently published figures reflect the success of initiatives like the 'Operation 300Bn' industrial strategy, which aims to double the industrial sector's GDP contribution by 2031 through a focus on advanced manufacturing, technology, and green industries.
He said that 'concurrently, the UAE's aggressive expansion of its Comprehensive Economic Partnership Agreement (CEPA) network is opening new markets. By Q1 2025, 26 CEPAs had been signed. These agreements significantly boosted trade with partners like India (31% growth) and Saudi Arabia (127% growth) in Q1 2025. The UAE's strong hub status also continues to attract crucial foreign investment and talent.'
Earlier this year, Thani Al Zeyoudi, the UAE's trade minister had told Reuters that through the UAE's CEPA programme, 'we are securing partnerships with those nations who share our belief that open, rules-based trade is an essential driver of economic growth, development and diversification.'
Meanwhile Dahrieh warned that while some external risks remain - such as a severe global economic downturn or heightened geopolitical instability affecting critical trade routes like the Strait of Hormuz - the UAE's robust diversification efforts and strategic partnerships position it strongly to navigate these challenges and meet its ambitious trade targets.
What role will Dubai play in this?
Even during the early oil boom, the UAE leadership, particularly from Dubai, recognized the finite nature of oil. Dubai began investing in trade, aviation, and tourism, setting the foundation for a non-oil economy.
Dubai's role is hugely important in all this, given it consistently accounts for over 40% of the UAE's non-oil foreign trade, making it the leading contributor among all emirates.
The emirate has its own strategic targets under Dubai Economic Agenda D33, aiming to double its foreign trade and become one of the top four global financial hubs by 2033. Itcan be argued that Dubai's ability to attract global trade flows and export trade policy innovation could help the UAE shave years off its timeline.
With infrastructure like Jebel Ali Port, Al Maktoum Airport, and more than 30 free zones, Dubai provides the platform for foreign companies to conduct regional trade.
Much of the non-oil trade passing through Dubai includes transit, re-export, and regional trade, serving GCC, Africa, Central Asia, and beyond.
Meanwhile Dubai's early adoption of smart customs, digital trade corridors, AI-driven logistics, and fast-track investor licensing helps create models that the UAE can scale nationally.
Copyright Business Recorder, 2025