The Central Bank of the United Arab Emirates (CBUAE) has upheld its real GDP growth forecasts for 2024 at 4.0 percent, with expectations for acceleration to 4.5 percent in 2025 and 5.5 percent in 2026.
Sectoral contributions to growth
As reported in the Quarterly Economic Review – December 2024, the growth outlook for the current year is primarily fueled by advancements in the tourism, transportation, financial and insurance services, construction and real estate, along with the communication sectors.
Non-oil GDP performance
Non-oil GDP growth advanced to 4.8 percent year-on-year (YoY) in Q2 2024, rising from 4.0 percent YoY in the preceding quarter, largely due to increased activity in manufacturing, trade, transportation and storage, as well as real estate.
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Future growth expectations
Looking ahead, non-oil GDP growth is projected to remain robust at 4.9 percent in 2024 and 5.0 percent in 2025, mainly driven by strategic initiatives and policies introduced by the government to attract foreign investments and enhance economic diversification.
Consistent growth in non-oil sectors
The 16 non-oil sectors have continued their consistent growth trajectory in Q3 2024. Key contributors to this growth in the non-oil sector include wholesale and retail trade, manufacturing, and construction.
Foreign investment in manufacturing
The manufacturing sector has continued to draw in more foreign direct investment (FDI), expanding in alignment with the strategies of the various Emirates and the Federal government. Additionally, the construction sector experienced significant growth in the first nine months of 2024.
Strengthening trade partnerships
The comprehensive economic partnership agreements (CEPA) that the UAE has established with numerous countries have further solidified its trade relationships. Consequently, non-oil trade in the UAE surpassed AED1.3 trillion in H1 2024, which is equivalent to 134 percent of the nation’s GDP, marking a 10.6 percent YoY increase. This further reflects successful implementations of the strategy to diversify the UAE economy and strengthen connections with key trading partners.
Oil production outlook
In the initial ten months of 2024, oil production averaged 2.9 million barrels per day and is anticipated to grow by 1.3 percent in 2024, with a further increase to 2.9 percent in 2025.
Fiscal performance highlights
The fiscal performance of the UAE during the first half of 2024 remained strong, showing significant improvements in government revenue and fiscal surplus compared to the same period in 2023. Additionally, the fiscal surplus reached AED65.7 billion, equivalent to 6.7 percent of GDP, which represents a 38.8 percent increase from AED47.4 billion (5.1 percent of GDP) recorded in H1 2023.
Revenue and expenditure growth
General government revenue in H1 2024 increased by 6.9 percent YoY to AED263.9 billion, or 26.9 percent of GDP, driven by a substantial 22.4 percent YoY rise in tax revenues.
Commitment to infrastructure development
Moreover, general government capital expenditure surged by 51.7 percent YoY to AED11 billion in the first half of 2024, reflecting the UAE government’s commitment to advancing major infrastructure projects and enhancing the country’s economic and investment landscape.
Private sector expansion
Economic activity in the UAE’s non-oil private sector continues to grow, indicating sustained business confidence regarding the nation’s economic outlook.
Business optimism and PMI
In October 2024, the UAE’s Purchasing Managers’ Index (PMI) reached 54.1, signaling ongoing optimism among local businesses, bolstered by expectations of sustained demand and sales, which are likely to support continued output growth. Additionally, forecasts of forthcoming initiatives and investments further bolster this positive perspective.
Dubai’s economic indicators
In Dubai, the PMI was recorded at 53.2 in October 2024, closely mirroring the overall index for the UAE and indicating ongoing growth within the emirate’s non-oil private sector.
Employment and wage trends
The number of employees registered under the CBUAE Wages Protection System (WPS) rose by 4.0 percent YoY in September 2024, while the average salary for employees increased by 7.2 percent YoY. These indicators of employment and wage growth suggest robust domestic consumption and sustainable GDP growth moving forward.
