Emirates NBD has recently revised its 2024 forecast for the UAE’s non-oil growth to 5 percent from the previous estimate of 4.5 percent, thereby raising the headline gross domestic product (GDP) growth to 3.7 percent from 3.3 percent. In its latest research report, Emirates NBD also predicts stagnant growth in the oil and gas sector this year due to ongoing production constraints imposed by OPEC+ cuts.
Meeting Expectations in 2023
The UAE’s economy expanded by 3.6 percent in 2023, aligning with the bank’s projections. Notably, the non-oil sector outpaced expectations, growing by 6.2 percent, while the oil and gas industry experienced a 3.1 percent decline.
Sectoral Growth in 2023
The financial services sector emerged as the fastest-growing segment, recording a 14.3 percent annual expansion, following a 6.6 percent growth in 2022. Transport, logistics, construction, and real estate services sectors also witnessed robust growth.
Abu Dhabi’s Non-Oil Growth
In Abu Dhabi, the non-oil GDP grew by 9.1 percent in 2023, slightly lower than the 9.2 percent in 2022. Wholesale and retail trade notably stood out with a 7.9 percent growth, surpassing the national average of 3.9 percent. However, due to declining oil production, Abu Dhabi’s headline GDP growth moderated to 3.1 percent from 9.2 percent in 2022.
Dubai’s Economic Growth
Dubai’s GDP expanded by 3.3 percent in 2023, driven by growth in the transport, logistics, hospitality, information and communication, and real estate sectors. However, manufacturing and wholesale and retail trade grew at a slower pace compared to the national average.
Future Prospects
Despite geopolitical tensions and a high-interest rate environment, the UAE’s economy has exhibited resilience. Emirates NBD anticipates a gradual easing of monetary policy by the end of the year, with an expected total of 50 basis points in rate cuts between September and December. Public sector investment, particularly in transport and infrastructure projects like the expansion of the Etihad Rail network and Al Maktoum airport, is expected to bolster non-oil GDP growth in the UAE in 2024, compensating for any decline in private sector investment and household consumption.
