Emirates NBD has recently upgraded its 2024 non-oil growth forecast for the UAE to 5 percent from 4.5 percent, taking headline gross domestic product (GDP) growth to 3.7 percent from 3.3 percent previously. In its latest research note, Emirates NBD also forecasts no growth in the oil and gas sector this year as production remains constrained by OPEC+ production cuts.
2023 growth meets expectations
In 2023, the country’s economy grew by 3.6 percent, in line with the bank’s forecasts. Meanwhile, the UAE’s non-oil sector grew faster than expected by 6.2 percent, while the oil and gas sector declined by 3.1 percent.
Last year, the financial services sector was the fastest growing, expanding 14.3 percent annually after growing 6.6 percent in 2022. Following closely came the transport and logistics sector with an 11.5 percent growth. Then came the construction and real estate services sector.
Abu Dhabi’s non-oil sector
Emirates NBD sheds light on growth in Abu Dhabi during 2023, stating that the emirate’s non-oil GDP grew 9.1 percent, marginally lower than 9.2 percent in 2022.
The key sectors behind Abu Dhabi’s non-oil GDP were similar to the UAE overall. However, wholesale and retail trade stood out with a significant 7.9 percent growth, compared to the 3.9 percent growth at a national level. Due to the decline in oil production, headline GDP growth for Abu Dhabi slowed to 3.1 percent in 2023 from 9.2 percent in 2022.
Dubai sees 3.3 percent growth
In Dubai, the transport, logistics and hospitality sectors drove the emirate’s 3.3 percent GDP growth in 2023. Moreover, information and communication (ICT) and real estate services also significantly contributed to the expansion. However, manufacturing and wholesale and retail trade both grew at a slower pace in Dubai than at the national level.
Read: UAE world’s second-largest global commodity trading hub: DMCC report
Future outlook
The UAE’s economy has proven remarkably resilient amid geopolitical tensions and a high-interest rate environment. Emirates NBD expects a modest easing in monetary policy by the end of the year, with a total of 50 basis point in rate cuts between September and December. This will likely impact the UAE’s private sector investment this year.
However, the bank expects public sector investment, particularly in transport and other infrastructure, to remain strong in 2024. Hence, the UAE has announced multiple large projects including the expansion of the Etihad Rail network and Al Maktoum airport. The bank believes that this investment will continue to support non-oil GDP growth in the UAE, offsetting any decline in private sector investment and household consumption.
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