CBUAE maintains 4% GDP growth forecast for 2024

The Central Bank of the UAE (CBUAE) has kept its real GDP growth forecast for 2024 at 4 per cent, with expectations for acceleration to 4.5 per cent in 2025 and 5.5 per cent in 2026, driven by robust growth across multiple sectors, including tourism, transportation, financial services, construction, and real estate.

In its Quarterly Economic Review – December 2024, the CBUAE pointed to the continued strength of the UAE’s non-oil economy, particularly in sectors aligned with the government’s diversification strategy.

Non-oil GDP growth surged to 4.8 per cent year-on-year (YoY) in Q2 2024, up from 4 per cent in the previous quarter. Key drivers of this growth included manufacturing, trade, transportation, and real estate activities.

The bank anticipates non-oil GDP growth will remain robust at 4.9 per cent in 2024 and 5 per cent in 2025. These projections reflect the government’s successful policies aimed at attracting foreign direct investment (FDI) and promoting economic diversification.

Non-oil sector growth remains strong, says CBUAE

The CBUAE’s report indicated that growth across 16 non-oil sectors remained steady through Q3 2024. Wholesale and retail trade, manufacturing, and construction were identified as central to the continued expansion of the non-oil economy.

The manufacturing sector, in particular, has seen an uptick in FDI, supported by both federal and local government initiatives. The construction sector also demonstrated strong growth in the first nine months of 2024, driven by large-scale infrastructure projects.

Further supporting this growth, the UAE’s comprehensive economic partnership agreements (CEPA) with several countries have bolstered trade relations. Non-oil trade exceeded Dhs1.3tn in H1 2024, accounting for 134 per cent of GDP and reflecting a 10.6 per cent YoY increase. This growth underscores the UAE’s ongoing efforts to diversify its economy and strengthen its global trade ties.

Oil production and fiscal performance

Oil production in the UAE averaged 2.9 million barrels per day in the first 10 months of 2024, with production expected to grow by 1.3 per cent in 2024, accelerating to 2.9 per cent in 2025.

The UAE’s fiscal performance also showed notable strength. The fiscal surplus for H1 2024 reached Dhs65.7bn, or 6.7 per cent of GDP, marking a 38.8 per cent increase from Dhs47.4bn in H1 2023.

Government revenue rose by 6.9 per cent YoY to Dhs263.9bn, driven by a 22.4 per cent increase in tax revenues.

In line with the government’s long-term economic strategy, capital expenditure surged by 51.7 per cent YoY to Dhs11bn in H1 2024. This reflects ongoing investments in large-scale infrastructure projects that are expected to further strengthen the UAE’s economic landscape.

Positive business outlook and employment indicators

The UAE’s non-oil private sector remains buoyed by strong business confidence. In October 2024, the UAE’s Purchasing Managers’ Index (PMI) stood at 54.1, signalling continued optimism among local companies.

The PMI in Dubai, a key economic hub, reached 53.2, suggesting that growth within the emirate’s non-oil private sector is on track.

The increase in business confidence is further reflected in employment and wage growth.

The number of employees covered by the CBUAE’s Wages Protection System (WPS) rose by 4 per cent YoY in September 2024, while the average salary increased by 7.2 per cent YoY.

These indicators point to robust domestic consumption and suggest that GDP growth will remain sustainable in the coming quarters.

Future outlook

The CBUAE’s economic review concludes that the UAE’s economy is on a steady growth trajectory, with strong contributions from both the oil and non-oil sectors.

With continued investment in infrastructure, the government’s diversification efforts, and a positive business environment, the outlook for the year ahead remains optimistic.

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