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UAE on track for 6.2% growth: AMF

Tourism activity, real estate, international trade, increased capital spending to drive expansion

Published: Sun 28 Jul 2024, 6:33 PM

By
Issac John

The UAE's economy is expected to record a 6.2 per cent growth in 2025 after achieving a 3.9 per cent jump in the current year, the Arab Monetary Fund (AMF) said in its latest projections.

The growth of the UAE in 2024 will be mainly driven by continued improvements in tourism activity, real estate, and international trade, increased capital spending, and ongoing efforts to support the economy, including developments in high-tech industries, the AMF said in its Arab Economic Outlook report.

The optimistic outlook by the AMF for 2025 is far more upbeat than the forecast of 4.2 per cent growth made by the International Monetary Fund recently but aligns with the latest growth projection made by the Central Bank of the UAE. The CBUAE has said the country's vibrant foreign trade performance would continue in 2024 and 2025, underpinning the projected GDP growth of 3.9 per cent in 2024 before accelerating to 6.2 per cent in 2025.

The Arab World’s second largest economy is actively pursuing accelerated growth with the aim of doubling its GDP to over $800 billion by the end of the decade as it continues to focus on developing its position as a global hub for business and finance. The country has been actively seeking bilateral trade deals and partnerships to drive its economic goals.

According to a Statista projection, the gross domestic product of the UAE in current prices would continuously increase between 2024 and 2029 by in total $157.4 billion (+29.82 per cent) and after the sixth consecutive increasing year, the GDP is estimated to reach $685.15 billion and therefore a new peak in 2029.

The UAE's economy shows strong fundamentals supported by a dynamic non-oil sector and robust public and monetary policies aimed at maintaining economic development, financial stability, and the soundness of the financial sector, the AMF stated. The predicted growth relies largely on its strategic initiatives to strengthen its position as a global hub for trade and finance, continuous infrastructure development, a strong regulatory framework that attracts foreign investments, and a focus on innovation, growth, and technology-based sectors.

The AMF report explained that the UAE witnessed significant economic growth in 2022, amounting to 7.5 per cent driven by a successful response to the Covid-19 pandemic, supportive financial measures, and the enhancement of a business-friendly environment implemented in previous years.

On top of that, there was strong growth in the fuel sector and a significant recovery in the tourism sector, said AMF in its report. The country also achieved a positive growth rate of about 3.6 per cent last year.

The report projected that the growth rate of Arab economies would improve in 2024, reaching about 2.8 per cent compared to 0.3 per cent in 2023. The pace of economic growth is expected to further improve to 4.5 per cent in 2025, with declining interest rates and tightly controlled inflation. This is in addition to the stability of oil prices at relatively high levels and the stability of commodity prices.

The AMF indicated that the main oil-exporting Arab countries are expected to benefit from improved energy price levels, which is expected to positively affect their economic growth in 2024 and 2025. The major oil-exporting countries are projected to witness a growth rate of 3.7 per cent in 2024, rising to 5.1 per cent in 2025.

The AMF estimated that the Kingdom of Saudi Arabia’s economy would grow by 4.4 per cent in 2024 and 5.7 per cent in 2025, while the Qatari economy is expected to grow by about 1.8 per cent in 2024 and 3.1 per cent in 2025.

The Kuwaiti economy is projected to grow by 2.7 per cent by the end of this year, rising to 3 per cent next year.

Post-pandemic, the UAE’s economic resurgence is primarily fueled by confidence in its policies, which have succeeded in attracting both talent and foreign direct investment across pivotal sectors such as real estate, travel and tourism, and retail. The surge in global oil prices also served as a catalyst for economic growth, further bolstering the UAE’s economic prospects, according to leading economists and analysts.

They said the projected growth not only underscores the resilience of the UAE economy but also positions it as a promising destination for investors seeking lucrative opportunities amidst a dynamic global landscape.