UAE’s GDP to Grow 4% in 2024, Says CBUAE

Supported by improvements in the oil sector, the Central Bank of UAE (CBUAE) has revised up its forecast for the country’s GDP growth by 0.1 percentage points – from 3.9% to 4% – in 2024.

For 2025, growth is expected to increase to 6%, as momentum in the non-hydrocarbon sector is projected to continue, while hydrocarbon production is forecasted to pick up significantly.

In its second-quarter economic report, the CBUAE also said that growth forecast continued to be driven by tourism, transportation, financial and insurance services, construction and real estate, and communications sectors; while the current levels of oil production during 2024 partially moderate the overall growth.

The UAE’s ongoing efforts to diversify its economy and to strengthen ties with key trading partners has led to a record $182.48 billion in non-oil foreign trade in Q1 of 2024, which was equivalent to 141% of the GDP, the report said.

“This strong performance, driven by a series of comprehensive economic partnership agreements, is expected to continue through 2024 and 2025, supporting real GDP growth projections of 4% in 2024 and an acceleration to 6% in 2025,” the CBUAE said.

While OPEC+ decisions on production quotas amid global uncertainties will influence overall growth, the non-hydrocarbon sector remains robust, with forecasted growth of 5.2% in 2024 and 5.3% in 2025, the CBUAE report noted.

Real Estate Sector

In the Abu Dhabi real estate sector, sales transactions in January-June 2024 increased by 2.3% Yo-Y, while apartment sales price index and villa sales price index in Q2 2024 increased by 6.2% and 3.9% y-o-y, respectively.

In Dubai, the market demonstrated growing activity, with residential sales transactions in the first half of 2024 growing up 34.8% y-o-y, and apartment sales price index and villa sales price index in Q2 of 2024 climbing by 14.3% and 25.3% Y-o-Y, respectively.

The transportation and tourism sectors have shown strong performance, with tourist arrivals up by 14.2% in the first half of 2024. Passenger traffic at Abu Dhabi and Dubai International Airports also surged, increasing by 33.8% and 8% y-o-y, respectively.

In light of global and domestic factors including commodity prices, wages, and rents, the CBUAE revised its inflation forecast for the UAE from 2.3% to 2.2% for 2024. Should disinflationary trends in food, beverages, and major non-tradable components persist, inflation forecasts may be further revised downward. For 2025, inflation is also projected at 2.2%, primarily influenced by non-tradable components and exchange rate behaviour of the US dollar.

The fiscal balance for the first quarter of 2024 remained positive at $6.4 billion, representing 4.9% of GDP, compared to $6.32 billion or 5.1% of GDP in the first quarter of 2023.

Consolidated budget revenue in January-March 2024 increased by 4.3% y-o-y, reaching $32.83 billion, or 24.9% of GDP. This growth was primarily driven by a significant 32.5% y-o-y rise in tax revenues.

The UAE’s fiscal conditions have become more stable, as evidenced by the growing share of tax revenue in total revenue, which rose from 45.8% in Q1 2022 to nearly 70% in Q1 2024. This shift is largely attributable to the recently introduced corporate tax, the report said.