Central Bank of UAE: GDP to Grow in 2024 Driven by Oil & Non-Oil Exports

The UAE’s gross domestic product is expected to grow at 4.3 % in 2024, driven by oil and non-oil exports, according to the latest forecast by the country’s central bank. In its 4th Quarterly Economic Review released on Monday, the Central Bank of the UAE (CBUAE) has retained its forecast unchanged at 3.9 % for this year.

This comes as the apex bank noted that the country’s economy had a good run in the first three quarters of 2022, with the fourth quarter set to maintain a solid footing, helping the UAE GDP to close the year at an estimated 7.6 %. While oil production is likely to slow by the OPEC+ agreements, the non-oil sector is expected to continue to support aggregate output, even if at a slower pace, the bank’s report revealed.

The real estate and construction sectors, as well as a vibrant manufacturing sector, such as refineries and aluminum production, are the key drivers of strong performance, noted the report. Furthermore, the FIFA World Cup in Qatar and other global events held in the region increased travel and tourism to the UAE – something that provided a much-needed boost to the economy.

In the fourth quarter of 2022, oil production averaged 3.1 million barrels per day, with UAE hydrocarbon GDP estimated to have grown by 10 % year-on-year in line with the OPEC+ agreements. OPEC agreed to cut production by 2 million barrels per day at the beginning of November, causing the CBUAE’s projections for hydrocarbon real GDP growth to be revised downward. As a result, the CBUAE expects oil GDP to rise by 3.0 % and 3.5 % in 2023 and 2024, respectively.

Following the robust growth in the first three quarters of 2022, the non-oil sector is expected to rise at a similar rate in the fourth quarter. The CBUAE expects the UAE’s non-oil GDP to grow at 6.6 % in 2022. The UAE’s Consumer Price Index increased by 4.6 % in the fourth quarter of 2022, compared to 6.5 % in the previous quarter. While inflation is rising in line with global trends, the apex bank noted that it is still much lower than the global average.

During 2022, CPI inflation averaged 4.8 %, which was close to CBUAE’s projection of 4.9 %. “In 2023, inflation is projected to decelerate to 3.2 %, on the back of softer price increases in all categories, especially transport and food, and beverages,” according to the report’s statement.