Abu Dhabi’s Economy Maintains Positive Momentum in Q2

Abu Dhabi’s economy maintained positive momentum in Q2 2025, driven by continued strength in non-oil activity under the emirate’s Falcon Economy strategy, the Abu Dhabi Investment Office (ADIO) said.

In its Abu Dhabi Economic Update for Q2, ADIO said that preliminary estimates place real GDP growth between 3% and 4% y-o-y, in line with Q1’s 3.4% expansion. This marks a consistent post-pandemic recovery, following full-year growth of 3.8% in 2024.

The non-oil economy continued to serve as the principal growth driver, advancing by an estimated 5% to 6% in Q2, following gains of 6.1% in Q1 2025. The non-oil sector reached 56.2% of the total GDP in early 2025, the highest share in over a decade.

This continues a structural shift in Abu Dhabi’s economic base and highlights the success of diversification efforts. Abu Dhabi’s real GDP reached $79.24 billion, up 3.4% y-o-y, during the first quarter of this year, ADIO said.

Oil’s share of GDP dropped to approximately 44% in Q1, one of the lowest on record, underscoring reduced dependence on hydrocarbons. Production increases are expected later in the year following revised OPEC+ baselines.

Abu Dhabi’s Q2 performance reinforces its position as a regional investment hub, with growth supported by structural diversification, low inflation, and sustained capital inflows, according to Abu Dhabi Investment Office (ADIO).

Wholesale and retail trade rose 3.6% in the first quarter, reflecting increased consumption driven by rising incomes and a growing population.

Public policy remains focused on stimulating non-oil growth and strategic initiatives such as the Abu Dhabi Industrial Strategy and major infrastructure programs are supporting expansion across sectors including manufacturing, logistics, and transport. Investor sentiment remains positive, buoyed by the emirate’s AA credit ratings, substantial sovereign wealth assets, and the UAE’s stable political and regulatory environment.

Despite global headwinds such as tighter monetary policy and geopolitical uncertainty, Abu Dhabi has sustained a growth rate that continues to outpace regional and global averages.

Quarter-on-quarter growth in Q2 2025 was likely on par with or slightly higher than Q1, supported by seasonal gains in tourism during the Eid period and mid-year fiscal outlays, ADIO said.

Manufacturing Continues to Expand

Manufacturing GDP in Q1 2025 was $7.76 billion, an increase of 5% y-o-y and the sector accounted for 9.8% of total GDP, reflecting capacity expansion under the Abu Dhabi Industrial Strategy.

FDI inflows into the UAE surged to $45.64 billion in 2024, marking a 48% increase from the prior year and placing the country among the world’s top 10 FDI destinations. Abu Dhabi, which has been a key driver of the country’s investment momentum, recorded $440 million in real estate FDI during the first quarter of 2025, a 12.6% decline from the same period last year.

The ADX general index rose 6.3% y-o-y in Q2 2025, outperforming most regional peers. Total traded value reached approximately $22.5 billion in Q2, up from $20.3 billion in Q1 2025, marking the largest increase among the markets in the Arab region.

Foreign net investment into ADX in H1 2025 surged to $3.7 billion, nearly doubling (+99.5% y-o-y) from $1.86 billion in H1 2024, reflecting strong global investor appetite, ADIO said.

The International Monetary Fund (IMF) has projected the UAE’s GDP growth of 4.2% in 2025, outstripping the 2.6% average forecast for the MENA region and 1.4% for advanced economies. This expansion is driven by non-oil sectors, public infrastructure spending, and pro-investment policy reforms. Low inflation and stable financial conditions are reinforcing the growth environment.