UAE Central Bank raises its growth projections for national economy in 2024 to 5.7%

The Central Bank of the UAE (CBUAE) has raised its forecast for the Gross Domestic Product (GDP) growth for the UAE in the coming year, 2024, to 5.7 per cent, compared to its previous projection of 4.3 per cent.

The bank stated in a report released on Thursday that the overall GDP for the country is expected to grow by 3.1 per cent in the current year, 2023.

The report anticipates a non-oil GDP growth of 5.9 per cent in 2023 and 4.7 per cent in the following year, while estimating the oil GDP growth at 8.1 per cent in 2024.

The Central Bank clarified that the UAE economy recorded a 3.8 per cent year-on-year (YoY) growth in the second quarter of the current year, compared to 8 per cent 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 per cent YoY in the second quarter of the current year, up from 4.5 per cent 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 per cent and 4.7 per cent, respectively.

It stated that the unified financial surplus during the first half of the current year amounted to Dhs47.4 billion, or 5.2 per cent of the GDP, compared to a surplus of 13.4 per cent during the same period in 2022.

According to the report, government revenues reached Dhs246.9 billion, constituting 26.4 per cent of the GDP on an annual basis during the first half of 2023.

Meanwhile, total expenditures amounted to Dhs199.5 billion, accounting for 21.3 per cent of the GDP on an annual basis.

The Central Bank's 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 signalled 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 clarified 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.