Abu Dhabi growth leans on non-oil engine

Abu Dhabi’s economy gathered pace in the third quarter of 2025 as real GDP reached 325.7 billion dirhams, equivalent to $88.68 billion, marking a year-on-year expansion of 7.7%, official data showed, underlining the emirate’s continued shift towards a broader growth base even as hydrocarbons remain a central pillar.

Figures released by the Abu Dhabi Statistics Centre indicated that the non-oil economy expanded by 7.6% over the same period, with non-oil activities accounting for 54% of total output in the quarter. The balance between oil and non-oil growth highlights a structural transition that has been gathering momentum through investment-led diversification, industrial expansion and services-sector resilience.

The headline number places Abu Dhabi among the faster-growing economies in the Gulf at a time when global growth has been uneven and energy markets have faced shifting demand patterns. Strong domestic demand, sustained public spending and a steady pipeline of private investment have helped cushion the economy against external volatility. Officials have framed the performance as evidence that long-term policy frameworks aimed at reducing dependence on crude exports are translating into measurable outcomes.

Within the non-oil segment, manufacturing, construction, transport and logistics, and financial services have been key contributors. Large-scale industrial projects under the emirate’s industrial strategy have added capacity in metals, chemicals and advanced manufacturing, while logistics has benefited from continued upgrades at ports, airports and industrial zones. Financial services activity has tracked rising business formation and capital market participation, supported by regulatory reforms and deeper regional integration.

Energy continues to shape overall output, but its relative weight has moderated as non-oil activities expand faster. Hydrocarbon production and associated services remain significant revenue drivers, particularly in periods of favourable pricing, yet policymakers have emphasised the importance of smoothing fiscal cycles by broadening the economic base. This approach has been reflected in budget allocations prioritising infrastructure, technology adoption and human capital development.

The third-quarter performance also aligns with Abu Dhabi’s medium-term ambitions under its economic vision, which targets sustainable growth through productivity gains rather than cyclical stimulus. Public investment has focused on enabling sectors such as renewable energy, defence industries, agri-tech and digital services, while incentives for foreign direct investment have sought to attract multinational firms to establish regional headquarters and manufacturing footprints.

Labour market dynamics have played a role in sustaining momentum. Population growth driven by skilled expatriate inflows has supported consumption and services demand, while initiatives to upskill the local workforce aim to improve participation in high-value sectors. Analysts note that productivity improvements, rather than sheer workforce expansion, will be critical to maintaining growth rates as the economy matures.

Non-oil expansion drives Abu Dhabi momentum, a phrase often echoed by policymakers, captures the strategic narrative behind the data. The 54% non-oil share of GDP in the quarter underscores progress toward a more balanced economy, though officials acknowledge that further gains will depend on execution and global conditions. Trade flows, particularly with Asia and emerging markets, have supported industrial exports, while tourism and hospitality have added incremental growth through higher visitor numbers and longer stays.

Inflationary pressures have remained contained, allowing monetary conditions to stay supportive. While interest rate settings are linked to the US dollar, targeted fiscal measures and supply-side investments have helped mitigate cost pressures in housing and utilities. This stability has been viewed as a factor encouraging long-term capital commitments from domestic and international investors.

Regional comparisons suggest Abu Dhabi’s growth profile differs from some peers that remain more exposed to oil price cycles. The emirate’s sizeable sovereign investment capacity has enabled counter-cyclical spending and strategic acquisitions abroad, feeding back into domestic activity through dividends, technology transfer and supply chain linkages. Such mechanisms have reinforced resilience during periods of external uncertainty.