The UAE economy is forecast to grow by 3.9 percent in the current year, 2024, rising to 6.2 percent in 2025, according to the Arab Monetary Fund (AMF).
Drivers of growth
In its most recent Arab Economic Outlook report, the AMF stated that the expected growth of the UAE’s economy this year is driven by continued improvements in tourism activity, real estate, and international trade, increased capital spending, and ongoing efforts to support the economy, including developments in high-tech industries.
Strength of UAE’s economy
The report added that the UAE’s economy shows strong fundamentals supported by a dynamic non-oil sector and robust public and monetary policies aimed at maintaining economic development, financial stability, and the soundness of the financial sector.
Driving global economic prominence through strategic initiatives
The country’s growth relies largely on its strategic initiatives to strengthen its position as a global hub for trade and finance, continuous infrastructure development, a strong regulatory framework that attracts foreign investments, and a focus on innovation, growth, and technology-based sectors.
UAE’s economic performance in 2022
The report highlighted the UAE’s impressive economic performance in 2022, which saw remarkable growth of 7.5 percent. This was driven by several key factors – a successful response to the COVID-19 pandemic, which allowed the economy to rebound strongly, supportive financial measures implemented by the government to aid businesses and consumers, and enhancements to the UAE’s business-friendly environment in previous years. In addition to the overall 7.5 percent growth, the report noted strong performance in specific sectors, with the fuel sector seeing robust growth and the tourism sector experiencing a significant recovery. The country also achieved a positive growth rate of around 3.6 percent in the previous year.
Projected growth of Arab economies
According to the report, the growth rate of Arab economies is projected to improve in 2024, reaching approximately 2.8 percent compared to 0.3 percent in 2023. The pace of economic growth is further expected to increase to 4.5 percent in 2025. This anticipated improvement is attributed to declining interest rates and tightly controlled inflation. Additionally, the report cites the stability of oil prices at relatively high levels and the stability of commodity prices as contributing factors to the improved economic outlook for Arab economies over the 2024-2025 period.
Read more: Experts forecast robust growth for the UAE economy in 2024 amid global challenges
Outlook for major oil-exporting Arab countries
The report explained that the main oil-exporting Arab countries are expected to benefit from improved energy price levels, which is projected to have a positive impact on their economic growth in 2024 and 2025. Specifically, the major oil-exporting countries are forecast to experience a growth rate of 3.7 percent in 2024, rising further to 5.1 percent in 2025. The improved energy price environment is anticipated to be a key driver underlying the strengthened economic performance anticipated for these major oil-exporting Arab nations over the 2024-2025 timeframe.
Moreover, the Arab Monetary Fund report estimated that the Kingdom of Saudi Arabia’s economy would grow by 4.4 percent in 2024 and 5.7 percent in 2025
Economic projections for selected Arab countries
AMF also noted that the Qatari economy is expected to grow by about 1.8 percent in 2024 and 3.1 percent in 2025. The Kuwaiti economy is projected to grow by 2.7 percent by the end of this year, rising to 3 percent next year. The report anticipated that the Sultanate of Oman’s economy would achieve growth rates of 2.3 percent and 2.7 percent in 2024 and 2025, respectively, while Bahrain’s economy is estimated to grow by 3.5 percent and 3.2 percent in 2024 and 2025, respectively.
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