Manufacturing Sector contributes 13% to Dubai’s GDP

  • Dubai’s Direct Exports valued at AED68 billion in 2010

Owing to increased government support and funding, the UAE’s manufacturing sector was among the largest non-oil contributor to Dubai’s GDP since 2009, according to the Dubai Manufacturing Sector Snapshot report published by Dubai Exports, an agency of the Department of Economic Development (DED), Government of Dubai.

The manufacturing sector ranked as the fourth highest contributor to GDP at 13.2% or AED38.72 billion, after Wholesale Trade, Retail & Repair; Transport/Storage/Communication; and Real Estate & Business activities at 30% (AED89 billion), 14% (AED41.54 billion), and 14% (AED40.29 billion) respectively. The sector also employs 8% of Dubai’s total workforce, proportional to its total contribution to GDP – an indication that the sector functions at relatively reasonable levels of productivity1.

In addition, based on constant levels of pricing, the manufacturing sector has experienced an average growth of 8% per annum between 2007 and 2010, despite a sharp decline in the curve between 2008 and 2009. In 2010, the manufacturing GDP growth posted 11% as compared to 6.20% in 20092.

Currently, Dubai’s annual industrial production is estimated at approximately AED200 billion, with total exports of AED68 billion accounting for 34% of the total production. Export of Gold products constituted 60% of the total export value. The growth in the value of direct exports correlated with growth in manufacturing GDP, indicating that exports sustained industrial growth during the financial crisis3.

In 2010, Dubai’s external trade activity exhibited recovery with increase in direct and Free Zone exports. Direct exports in 2010 posted AED68 billion, a 24% increase from AED52 billion in 2009, while Free Zone exports were valued at AED143 billion as compared to AED112 billion in 20094, a hike of 28%.

“Dubai is the ideal location providing world class trading platform for a wide array of commodities. This Manufacturing report findings show a growing export market with significant opportunities for Dubai manufacturers. The Dubai government, realise the importance of diversifying sources of income and increasing the participation of the industrial and the export sectors in increasing the country’s GDP,” said Engineer Saed Al Awadi, Chief Executive Officer, Dubai Exports.

The make-up of the manufacturing sector in 2009 showed that at AED18.1 billion per firm, Basic Metal production is the most capital and labour-intensive activity, followed by production of Non-Metallic Minerals at AED1.84 billion. The largest numbers of manufacturing firms are involved in Fabricated Metal & Equipment, and Wood Products including Furniture, with 634 and 299 of employees, respectively5.

Meanwhile, only 3% of the total industrial firms have investments exceeding AED50 million and most of these industrial firms are in the Non-Metallic Minerals products, and Food, Beverages. The investments are derived primarily from local sources, while foreign investments constitute roughly 8% of the total capital6.

In terms of labour strength, the Metal Fabrication segment has the highest number of companies that hires more than 100 employees per firm, including the most firms to employ 10 people or less, while 84% of industrial firms in various segments have employment strength less than 100 persons. Meanwhile, 56% of all industries are located in the Jebel Ali Free Zone (JAZFA), while 16% are in Al Quoz and 13% in Al Qusais7.

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