Abu, Dhabi, UAE — The Central Bank of the UAE (CBUAE) raises the forecast for UAE’s GDP growth to 5.7 percent in 2024, from its previous projection of 4.3 percent.
The bank stated in a report released today that the overall GDP for the country is expected to grow by 3.1 percent in 2023.
The report anticipates a non-oil GDP growth of 5.9 percent in 2023 and 4.7 percent in the following year, while estimating the oil GDP growth at 8.1 percent in 2024.
The bank said that the UAE economy recorded a 3.8 percent year-on-year (YoY) growth in the second quarter of the current year, compared to 8 percent recorded in the same period last year, aligning similarly with the first quarter of the current year.
It mentioned that the non-oil GDP growth accelerated to 7.3 percent YoY in the second quarter of the current year, up from 4.5 percent YoY in the previous quarter and 6.4 percent YoY compared to the same period last year.
Regarding the non-oil sectors of the economy, the report highlighted significant expansions in financial services, insurance, construction, wholesale, and retail trade, leading to an adjustment in the expected growth rate for 2023 and 2024 to 5.9 percent and 4.7 percent, respectively.
It stated that the unified financial surplus during the first half of the current year amounted to AED 47.4 billion, or 5.2 percent of the GDP, compared to a surplus of 13.4 percent during the same period in 2022.
According to the report, government revenues reached AED 246.9 billion, constituting 26.4 percent of the GDP on an annual basis during the first half of 2023. Meanwhile, total expenditures amounted to AED 199.5 billion, accounting for 21.3 percent of the GDP on an annual basis.
The report highlighted the continued robustness of non-oil private sector economic activity. The Purchasing Managers’ Index (PMI) for the UAE surged to 57.7 in October, marking its highest level since June 2019. The improvement in working conditions was propelled by a sharp rise in both business activity and new orders, particularly in new export orders, growing at the fastest pace in over four years.
The report indicated that the PMI data generally signaled strong growth in the non-oil sector in the third quarter and in October. Companies remained optimistic about expectations over the next twelve months.
The report also noted an increase in Dubai’s PMI to its highest level since August 2022, reaching 57.4 in October. The substantial increase in new orders, expanding at the fastest pace since mid-2019, was the primary driver for the overall increase, boosting business confidence to its highest level in over three years.
It added that in line with the economic activity’s resilience, private-sector employment continued to expand rapidly. The number of employees in this sector in September reached a 5.5 percent higher ratio than the previous year, with total wages in the private sector rising by 8.2 percent annually.
The influential PMI survey pointed to increased employment in the UAE to meet the strong surge in new orders at the end of the current year’s third quarter and into October.