A prominent rating agency has stated that the United Arab Emirates (UAE) is expected to achieve a gross domestic product (GDP) growth rate of over 5 percent this year, surpassing global economic projections. Speaking to the Emirates News Agency (WAM), Tatiana Leskova, associate director of corporate ratings at S&P Global, highlighted that the growth in the UAE’s GDP, particularly in Dubai, will be driven by strong momentum in the hospitality, wholesale and retail, and financial services sectors. S&P Global had previously forecasted a global GDP expansion of 2.8 percent in 2024.
Leskova further emphasized that despite minimal global economic growth, the UAE’s GDP expanded by more than 3 percent in 2023, with the non-oil sector experiencing close to 6 percent growth. She also anticipated continued strong momentum in Dubai’s hospitality, wholesale and retail, and financial services sectors, contributing to growth in 2024-2025. Leskova noted that the real estate sector in the UAE, specifically in Dubai, has been resilient to global economic challenges due to its limited sensitivity to interest rates and controlled inflation.
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Dubai real estate market resilient to interest rates
Additionally, Leskova explained that despite higher interest rates, Dubai’s mortgage transactions continued to increase, with over 80 percent of real estate transactions being conducted in cash. In contrast, the European real estate market has been affected by reduced purchasing power since 2022, influenced by high-interest rates and comparatively higher inflation. Leskova also highlighted a shift in the investor profile in the Dubai real estate market since 2022, with an increase in Russian buyers. However, she expects this trend to be temporary, with Indians, Europeans, and GCC buyers remaining the largest investor groups historically.
Robust growth in UAE’s non-oil sector
Despite global economic challenges, the UAE has been experiencing robust growth in its non-oil sector, aligning with the country’s efforts to diversify its economy. S&P Global’s latest Purchasing Managers’ Index (PMI) report, released in December 2023, revealed that the UAE’s PMI reached 57.4, indicating growth in the non-oil sector. This figure increased from 57 in November. A PMI reading above 50 signifies expansion, while readings below 50 indicate contraction.
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