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The UAE is on track to double its growth next year on the back of strong expansion in the non-oil sector and high revenues from oil, according to a new report on Wednesday.
The country’s gross domestic product (GDP) is expected to reach 4.8% in 2024, up from 2.4% in 2023, the latest Economic Insight commissioned by ICAEW and compiled by Oxford Economics said.
The report noted that the country’s GDP already grew by 3.7% year-on-year in the second quarter of 2022, supported by the non-oil sector’s performance.
Fiscal surpluses will be above 5% of GDP in the near and medium term. Last year, fiscal surpluses already exceeded 9% of GDP, the second highest in the region after Qatar, driven by revenue growth of 31.8%, largely due to higher oil revenues.
“This fiscal resilience has been further bolstered by the growth of the non-oil sector, providing a stable alternative revenue stream,” the report said.
The purchasing managers’ index (PMI) hit 57.7 in October, the highest since the COVID-19 pandemic, while the credit sector is also on a growth path, with retail loans rising by nearly 10% year-on-year despite higher borrowing costs.
Oil output
The oil output is expected to average at 3.35 million barrels per day in 2024, which the report considers as robust, though significantly below the UAE’s maximum capacity of around 4.5 million barrels per day.
Also expected to drive economic growth, particularly in the non-oil sector, is the UAE’s efforts to implement development plans. The report noted that after the hosting of COP28, sustainability-linked initiatives are likely to intensify.
“The recent successful sovereign bond sale, which raised $1.5 billion has bolstered these efforts. The country’s forthcoming integration into the BRICS block in January marks a significant milestone, enhancing trade and investment opportunities and supporting its diversification strategy,” the report said.
“The UAE is also making significant headway in green sukuk financing, allocating funds to sustainable projects and advancing its net-zero transition. Post COP28, the UAE is expected to intensify efforts towards fulfilling its net-zero commitments.”
(Writing by Cleofe Maceda; editing by Seban Scaria)
