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UAE’s 3.4% Q1 GDP surge reflects economic resilience

Growth was driven by financial & insurance activities

The real gross domestic product of the UAE recorded 3.4 per cent growth year-on-year to Dh430 billion in the first quarter 2024, underlining “the resilience and vitality” of the national economy.

The non-oil sector recorded a more vibrant growth at 4.0 per cent during the quarter compared to the same 2023 period in line with the economic objectives of “We the UAE 2031” vision, which includes raising the country’s GDP to Dh 3 trillion by the next decade.

The non-oil sector growth was driven by financial and insurance activities, which registered the fastest growth rate of 7.9 per cent due to the increase in the local credit to the private sector, according to the preliminary estimates for the quarter issued by the Federal Competitiveness and Statistics Centre (FCSC).

Abdulla bin Touq Al Marri, Minister of Ecnonomy, said the impressive performance underlined “the resilience and vitality of the national economy and exemplified its ability to continue on the path of sustainable growth. They also reflect the UAE’s commitment to fostering economic diversification focused on knowledge economy sectors.”

The FCSC data revealed that robust tourism inflows to the UAE led to a 4.6 per cent growth in restaurant and hotel activities.

The minister said the Arab world’s second-largest economy “adopted an innovative economic model that supports its future vision, along with effective national economic strategies” that enhanced openness to the world, promoting partnerships, and transitioning towards an economic model based on flexibility and innovation.

“The financial and economic data and indicators endorsing the growth of the UAE’s GDP Q1 2024 reflect the resilience of the country’s vital economic sectors. It highlights the effectiveness of the concerted efforts to implement the directives of the wise leadership to enhance sustainable economic diversification, reduce dependence on oil, promote investments, and attract capital and innovative and emerging projects to the country,” Hanan Ahli, managing director of the FCSC, said.

She said the UAE’s advanced rankings in multiple global economic competitiveness indicators can be attributed to several factors, including the stability of the financial system, the strength of the national economy, and the effectiveness of economic legislation and policies applied in the country, besides their ability to adapt to changes and face regional and global challenges.

In a statement, the FCSC said the growth in financial and insurance activities can be attributed to the significant increase in the local credit granted to the private sector, which led to a six per cent growth and positively impacting the rebound of non-oil economic activities. Following closely behind in the second place are transportation and storage activities, which saw a growth of 7.3 per cent. “This growth was driven by a notable increase in the number of travellers at the country’s airports during the first three months of this year, reaching 36.5 million travellers, a growth rate of 14.7 per cent compared to the same period last year.”

The UAE’s ports have demonstrated exceptional performance during this time, with Dubai’s international ports witnessing a 3.7 per cent growth in the number of containers handled, while Abu Dhabi’s ports experienced a 36 per cent increase in cargo handling volume on an annual basis.

Ranking third, construction and building activities experienced a growth rate of 6.2 per cent in line with the several development projects initiated by the UAE government in early 2024. They saw a substantial rise in the government’s public capital expenditures, reaching Dh4.8 billion, compared to that of Q1 2023.

The data shows that the restaurant and hotel sector secured the fourth spot with a 4.6 per cent growth during the first quarter of 2024 compared to the corresponding period in 2023. Moreover, the UAE emerged at the forefront of the global tourism landscape, attracting a substantial number of tourists from around the world. In particular, Dubai witnessed a remarkable influx of 5.18 million international tourists, representing an 11 per cent increase as compared to the corresponding period in 2023. Abu Dhabi also maintained its exceptional performance in key tourism indicators, including the average hotel occupancy rates and revenue per available rooms.

Trade activities made the largest contribution to the non-oil GDP, accounting for 16.1 per cent. Manufacturing activities come in second at 14.6 per cent, with financial and insurance activities ranking third at a rate of 13.4 per cent. Construction and building activities contribute 11.8 per cent, followed by the real estate activities with a contribution of 7.1 per cent.