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UAE non-oil growth gains added thrust: Opec

The UAE’s tourism sector continues to rebound

The growth prospects in the UAE’s non-oil GDP continue to build momentum, supported by increased business confidence, a spate of government reforms and expansion in household spending, economists and analysts at various global organisations predicted.

The Organisation of the Petroleum Exporting Countries (Opec) said in its Oil Market Report for October that the second-largest Arab economy remains robust, with constant contributions from the non-oil sector, especially from tourism, leisure, and real estate.

The UAE’s tourism sector, which accounts for more than 16 per cent of the country’s GDP, continued to rebound and even exceeded the pre-pandemic level in terms of the number of visitors. The number of visitors to Dubai rose by 19 per cent y-o-y in H1-23, the report said.

September’s S&P Global UAE PMI reflects this optimism, as it rose to 56.7 from 55 in the previous month, marking the strongest growth in the country's no-oil private sector since June, as new orders increased to their highest level since June 2019.

The UAE’s Minister of Economy Abdulla bin Touq Al Marri has said the Emirates is looking to accelerate economic growth as it seeks to double its gross domestic product by the end of the decade. “The focus is to grow by 7.0 per cent. We need to double our economy so it reaches Dh3 trillion ($817 billion) in output by the end of 2030,” he said.

The International Monetary Fund has forecast that the UAE's real GDP will grow by 3.4 per cent in 2023 and 4.0 per cent in 2024. The upbeat outlook by the Washington-based institution is in line with that of the World Bank, which released a similar estimate. The IMF said that the UAE's current account balance is expected to be about 8.2 per cent of GDP in 2023 and 7.7 per cent of GDP in 2024.

The Central Bank of the UAE maintained its growth forecast unchanged at 4.3 per cent for 2024. The current pace of growth reflects the strong performance of the non-oil sector, partially offset by a moderation in the oil segment of the economy. For 2023, growth has been r per cent reflecting oil production cuts agreed among Opec+ members. The non-oil sector is expected to continue to support aggregate output, albeit at a more modest pace compared to 2022, the apex bank observed.

Analysts and economists believe the government’s myriad initiatives and reforms to support growth and economic diversification will continue to ensure the global appeal of the UAE as a destination of choice for investment and business. A slew of investor-friendly initiatives, innovative measures and reforms including the liberal residency visa programmes,100 per cent foreign ownership of companies, and new trade agreements such as the Comprehensive Economic Partnership Agreements (Cepa), have given the growth momentum a major thrust over the past few years. These measures align with the “We are the Emirates 2031” vision, with Dubai’s “D33” Economic Agenda focusing on growth, foreign investment, and trade, and Abu Dhabi’s target to double manufacturing by 2030.

Sectors that are driving the growth are booming real estate and travel and tourism, with Dubai surpassing pre-pandemic visitor levels by the first half of 2023. In 2023, the country is poised to record a 40 percent increase in international visitors, driven by the UAE’s National Tourism Strategy to become a major global tourist destination by 2031. At the core of the overall growth strategy is the diversification drive encompassing energy alternatives, financial services, and high-tech sectors. The travel and tourism sector remains vital for economic growth, along with real estate, creative industries, and logistics, analysts said.