The UAE is all set to remain the Gulf’s leading economy this year and the next with strong growth despite a slower start at the beginning of 2024.
The recently-released first-quarter data from Abu Dhabi and Dubai showed a slower start this year.
The economic growth of Abu Dhabi slowed from 4.1 per cent year-on-year in Q4 2023 to 3.3 per cent year-on-year in Q1 of this year.
The first-quarter data for Abu Dhabi, showed that growth in both the oil and non-oil sectors slowed. In Q2, oil production volumes appear to have been broadly flat compared to Q1 and, in year-on-year terms, growth picked up from -4.2 per cent year-on-year in Q1 to -1.0 per cent. This would mark the fastest pace of oil output growth since Q1 2023 as per economists.
Meanwhile Dubai’s growth slowed down to 3.2 per cent. But as these are the two largest Emirates, it can be concluded that the growth slowed down across the country as well.
The experts predict that UAE’s economy will grow by 3.3 per cent this year as activity in the private non-oil economy softens a touch and oil output remains constrained. However, that would still make the UAE the fastest-growing economy in the Gulf.
When the oil output rises next year, the GDP growth is expected to accelerate above-consensus 5.5 per cent in 2025 – again meaning that the UAE retains its crown as the fastest-growing economy in the region.
The growth projected by The Central Bank of UAE for the year 2024 stood at 4.2 % and an even higher growth rate of 5.2 per cent for next year, mainly driven by non-oil GDP. Similarly, the IMF also projected about 4 per cent GDP growth in 2024 in May, revising up from the 3.5 per cent forecast it released in April.
Opec and other oil producers decided in the last meeting to leave oil output virtually unchanged until October and to unwind voluntary output cuts thereafter.
On a positive note the growth in the Gulf economies is likely to pick up in the coming quarters, particularly as oil output starts to rise from October.
