The Central Bank of the UAE (CBUAE) raised its gross domestic product (GDP) forecast for 2024 to 5.7 percent, compared to its previous forecast of 4.3 percent.
CBUAE’s GDP forecast
In a report, CBUAE expected that the country’s overall GDP will grow by 3.1 percent in 2023. The report also expected that the non-oil GDP will make up 5.9 percent of overall GDP this year and 4.7 percent in 2024. Meanwhile, CBUAE estimated that oil GDP growth would make up 8.1 percent of the GDP in 2024.
CBUAE explained that the economy recorded a growth of 3.8 percent annually during the second quarter of this year. That is compared to the 8 percent the economy recorded in the same period last year, on par with the first quarter of 2023.
Moreover, CBUAE stated that non-oil GDP growth witnessed a 7.3 percent increase annually in the second quarter of 2023. It increased from 4.5 percent annually in the previous quarter, and 6.4 percent compared to the same period last year.
As for the non-oil sector, the report stated that the financial services, insurance services, construction, wholesale and retail, and trade sectors witnessed a significant expansion. In turn, this led CBUAE to revise its growth expectations for 2023 and 2024 to 5.9 percent and 4.7 percent, respectively.
Moreover, CBUAE revealed that the fiscal balance during the first half of this year recorded a GDP surplus of AED47.4 billion, a 5.2 percent increase annually. That is compared to a surplus of 13.4 percent during the first half of 2022.
According to the report, government revenues amounted to AED246.9 billion during the first half of 2023 or 26.4 percent of the GDP annually. Meanwhile, total expenditures amounted to AED199.5 billion, or 21.3 percent of the GDP annually.
CBUAE’s report revealed that economic activity in the non-oil private sector maintained its resilience. Hence, the UAE Purchasing Managers’ Index (PMI) rose to 57.7 in October, its highest level since June 2019. Moreover, a sharp rise in both business activity and new orders improved business conditions, with new export orders rising at the fastest pace in more than 4 years.
The report also stated that the PMI data generally indicated strong growth in the non-oil sector in the third quarter and last October. Besides, companies are optimistic about the next twelve months’ expectations.
CBUAE’s report stated that those reasons were the main driver of the increase in the overall figure. This also boosted business confidence, which rose to its highest levels in more than 3 years.
The report explained that, in line with the flexibility in economic activity, employment in the private sector continued to expand rapidly. The number of employees in the private sector in September recorded a 5.5 percent increase annually. Moreover, total wages in the private sector rose by 8.2 percent annually.
An influential purchasing managers’ survey indicated the increase in employment in the UAE was driven by the strong increase in new orders during the third quarter of 2023 and in October.
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