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Robust UAE economy marks ‘a historic first’

non-oil sector accounting for 73% of country's GDP

Published: Thu 29 Feb 2024, 7:12 PM

By
Issac John

The International Monetary Fund has predicted strong economic growth for the UAE, aligning with the World Bank’s estimates, forecasting a 3.4 per cent GDP increase in 2023 and four per cent in 2024.

The UAE has achieved “a historic first” as its robust national economy reached milestone in its diversification drive with the non-oil sector accounting for 73 per cent of the country's total GDP.

“This achievement reflects the confidence of the private sector and investors around the world in the UAE’s investment environment,” Abdullah bin Touq Al Marri, Minister of Economy, said while predicting that the Arab world’s second-largest economy would grow by up to 5.0 per cent in 2024.

Speaking to the media on the occasion of the third annual conference of Investopia, the minister said the private sector is a key pillar in the new economic and investment landscape. “It is at the heart of global changes and challenges. And in implementation of the directives of the wise leadership, the UAE has identified the most sustainable and flexible economic sectors, which have reached more than 16 sectors, including health technology, agriculture, education, financial services, artificial intelligence, and other sectors that contribute to the sustainability of economic sectors and enhance the strength of the national economy.”

The two-day Investopia, the global investment platform launched by the UAE government in September 2021, took place in Abu Dhabi under the theme ‘Emerging Economic Frontiers: Investing in the New Economy Growth Sectors.

Al Marri’s GDP growth projection falls short of the forecast given by the Central Bank of the UAE (CBUAE). The apex bank has raised its forecast for the GDP growth for the UAE for 2024 to 5.7 per cent, compared to its previous projection of 4.3 per cent. The CBUAE anticipates a non-oil GDP growth of 5.9 per cent in 2023 and 4.7 per cent in the following year, while estimating the oil GDP growth at 8.1 per cent in 2024.

The International Monetary Fund has predicted strong economic growth for the UAE, aligning with the World Bank’s estimates, forecasting a 3.4 per cent GDP increase in 2023 and four per cent in 2024. The UAE’s current account balance is anticipated to be 8.2 per cent of GDP in 2023 and 7.7 per cent in 2024.

According to Standard & Poor’s (S&P) Global Ratings projections, the UAE’s GDP is expected to expand by over five per cent in 2024, exceeding the 2.8 per cent growth expected for the global economy,

Tatiana Leskova, associate director of Corporate Ratings at S&P Global Ratings, has said that “while the global economy remained subdued operating at subpar growth levels, we estimate that UAE GDP expanded at over three per cent in 2023, including close to six per cent growth for the non-oil sector. In Dubai, we expect continued strong momentum in the hospitality, wholesale and retail, and financial services sectors to drive growth in 2024-2025,” she explained.

Swiss Re Group, a leading global insurance provider, expects a pick-up in UAE real GDP growth to 4.2 per cent this year, supported by strong construction activity, tourism benefiting from the National Tourism Strategy 2031, and government investments in infrastructure and green energy, given its commitment to reduce emissions.

“The reversal of last year’s oil production cuts should boost growth, as production cuts slowed real GDP growth to 2.8 per cent in 2023. The real estate sector grew strongly in 2023, reaching a record high residential transaction volume of 112 356 for January-November 2023.1 International events, including the COP28 climate summit in Dubai in late 2023, boosted inbound visitor numbers,” it said.