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Home / Features / UAE Manufacturing Sector

Special Features

UAE Manufacturing Sector

UAE manufacturing sector is dominated by the non-metallic minerals industry which represents 32% of all establishments in the sector, followed by fabricated metal and equipment 15%, basic metallic mineral products 6%, paper products 6%, chemical & plastic products 4.8%, food & beverage 4%, wood products 3.8% and textile wearing apparel 0.8%. The manufacturing sector is a major contributor to the UAE non-oil GDP. In 2006, real GDP of the manufacturing sector was 54.4 billion Dirhams. Manufacturing sector represented about 19% of the total GDP on average for the period 2001-2006, followed by trade and government sectors. In terms of share to total GDP, the manufacturing sector’s GDP share has decreased from 20 percent in 2001 to 18.8 percent of total non-oil GDP in 2006. Whereas trade the second sector in terms of GDP share, has increased from 12.7 % in 2001 to 16.9% in 2006. Manufacturing sector average share in the Non-oil total production for the period 2001-2006 is about 23%, followed by the construction, government services and trade sectors of about 16%, 12.1% and 11.9% respectively . Employment UAE manufacturing sector secured about 306 thousands jobs on average for the period 2001-2006, representing about 13% of the total UAE employment. The share of the manufacturing sector in total employment has remained constant throughout 2001-2006 period of about 13%. Manufacturing sector comes third after the construction and trade sectors. From 2001 to 2006, employment in the manufacturing sector increased by 45%, at compound annual growth rate of 8.0 percent. Capital Formation 17% of the UAE gross fixed capital is created in the manufacturing sector, the second highest rank after transport and communication sector whose average share in capital formation in 2001 -2006 is 18%. Trade Although the manufacturing sector represents on average 19% of the country’s GDP, the sector is not yet playing substantial role in UAE foreign trade, since exports of the manufactured products represent not more than 3.5% of the total exports. 65% of the total imports products are mainly used for re-exports or capital goods for the manufacturing and other sectors. The potential of the manufacturing sector is crucial for future prospect of the UAE economy. The sector is outperforming most of the economic sectors in terms of GDP share, production, labor productivity and is able to substitute significant part of imports. Although the manufacturing sector’s production increased by more than 100% for the period from2001 to 2006, its GDP average share decreased during the period of investigation by 1.2% points, while employment share remained constant. This means that the share of other sectors in GDP are growing faster than the manufacturing sector, an alarming signal for the sector and a call for more attention to promote industrial development of the country.

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