UAE Central Bank Keeps 2024 GDP Growth Projections Steady at 4%

Photo: Reuters

The Central Bank of the UAE (CBUAE) has kept its GDP growth forecast for 2024 at 4%, with expectations for growth to rise to 4.5% in 2025 and 5.5% in 2026. This projection is based on growth in several important sectors, including tourism, transportation, financial services, construction, and communications.

According to the CBUAE’s Quarterly Economic Review for December 2024, the UAE's economy is seeing positive growth this year. Non-oil GDP, which refers to the parts of the economy unrelated to oil production, grew by 4.8% in the second quarter of 2024, compared to 4.0% in the first quarter. This increase is mainly due to stronger manufacturing, trade, transportation, and real estate growth.

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The non-oil GDP is expected to continue growing strongly, with a forecast of 4.9% growth in 2024 and 5.0% in 2025. This is largely due to government strategies to attract foreign investments and promote economic diversity.

In the third quarter of 2024, the 16 non-oil sectors in the UAE continued to grow steadily. Key sectors such as wholesale and retail trade, manufacturing, and construction played a major role in this growth. The manufacturing sector, in particular, attracted more foreign direct investment (FDI), which has helped support growth in line with the strategies of the UAE and its federal plans.

The UAE’s trade has also been growing. Thanks to the comprehensive economic partnership agreements (CEPA) signed with several countries, the UAE’s non-oil trade reached AED 1.3 trillion in the first half of 2024, which is 134% of the country’s GDP. This is a 10.6% increase compared to the previous year, showing that the UAE’s strategy to diversify its economy and strengthen trade ties is working.

In terms of oil production, the UAE averaged 2.9 million barrels per day in the first 10 months of 2024. Oil production is expected to increase by 1.3% this year, with further growth forecasted at 2.9% in 2025.

The UAE’s fiscal performance has also been strong. In the first half of 2024, the government’s fiscal surplus reached AED 65.7 billion, which is 6.7% of GDP. This is a 38.8% increase from the surplus of AED 47.4 billion in the same period in 2023. The government’s revenue grew by 6.9% year-on-year, driven by a significant increase in tax revenue.

Government spending has also increased, with capital expenditure rising by 51.7% compared to the previous year. This shows that the government is investing heavily in infrastructure projects to strengthen the country’s economy and investment climate.

Economic activity in the non-oil private sector remains strong. The UAE’s Purchasing Managers’ Index (PMI), which measures business activity, reached 54.1 in October 2024, indicating that companies are optimistic about future growth. Similarly, Dubai’s PMI stood at 53.2 in October, reflecting continued growth in the emirate's non-oil sector.

Employment in the UAE is also on the rise. The number of employees covered by the Wages Protection System (WPS) grew by 4% year-on-year in September 2024, and average salaries increased by 7.2%. These positive signs suggest that domestic consumption is growing, which will help support continued GDP growth in the future.