The UAE’s economy is expected to grow by 3.9 per cent in the current year, 2024, rising to 6.2 per cent in 2025, according to the Arab Monetary Fund (AMF).

In its Arab Economic Outlook report issued on Thursday, the AMF stated that the expected growth of the UAE’s economy this year is driven by continued improvements in tourism activity, real estate, and international trade, increased capital spending, and ongoing efforts to support the economy, including developments in high-tech industries.

The report added that the UAE’s economy shows strong fundamentals supported by a dynamic non-oil sector and robust public and monetary policies aimed at maintaining economic development, financial stability, and the soundness of the financial sector.

The country’s growth relies largely on its strategic initiatives to strengthen its position as a global hub for trade and finance, continuous infrastructure development, a strong regulatory framework that attracts foreign investments, and a focus on innovation, growth, and technology-based sectors.

The report explained that the UAE witnessed significant economic growth in 2022, amounting to 7.5 per cent, driven by a successful response to the COVID-19 pandemic, supportive financial measures, and the enhancement of a business-friendly environment implemented in previous years.

Additionally, there was strong growth in the fuel sector and a significant recovery in the tourism sector. The country also achieved a positive growth rate of about 3.6 percent last year.

The report projected that the growth rate of Arab economies would improve in 2024, reaching about 2.8 per cent compared to 0.3 per cent in 2023. The pace of economic growth is expected to further improve to 4.5 per cent in 2025, with declining interest rates and tightly controlled inflation. This is in addition to the stability of oil prices at relatively high levels and the stability of commodity prices.

The report indicated that the main oil-exporting Arab countries are expected to benefit from improved energy price levels, which is expected to positively affect their economic growth in 2024 and 2025. The major oil-exporting countries are projected to witness a growth rate of 3.7 percent in 2024, rising to 5.1 percent in 2025.

The Arab Monetary Fund report estimated that the Kingdom of Saudi Arabia’s economy would grow by 4.4 percent in 2024 and 5.7 percent in 2025, while the Qatari economy is expected to grow by about 1.8 percent in 2024 and 3.1 percent in 2025.

The Kuwaiti economy is projected to grow by 2.7 percent by the end of this year, rising to 3 percent next year.

The report anticipated that the Sultanate of Oman’s economy would achieve growth rates of 2.3 percent and 2.7 percent in 2024 and 2025, respectively, while Bahrain’s economy is estimated to grow by 3.5 percent and 3.2 percent in 2024 and 2025, respectively.

Separately, the UAE economy is set for more growth in the second half of this year, achieving qualitative leaps and exceptional accomplishments thanks to a stable investment and economic environment capable of continuing to prosper despite global economic uncertainties.

The expected performance in 2024 is a continuation of last year’s successes, with positive growth rates across macroeconomic indicators. GDP reached Dhs1.68 trillion in 2023, growing by 3.6 per cent.

Meanwhile, the non-oil GDP at constant prices was Dhs1.25 trillion, growing by 6.2 per cent, placing the national economy fifth globally in the real GDP growth index.

The World Bank forecasts a GDP growth of 3.9 per cent for the UAE, which is expected to rise to 4.1per cent in 2025. Meanwhile, the International Monetary Fund (IMF) expects the national economy to grow by 4 per cent in 2024, driven by strong activity in the tourism, construction, manufacturing, and financial services sectors.

Dr Karim El Solh, Co-Founder and Chief Executive Officer of Gulf Capital, believes the UAE’s economy is on an upward trajectory, bolstered by strong momentum over the past two years. He commended the UAE government’s proactive measures, such as stimulus packages, foreign investment incentives, and efforts to improve business ease, amid global economic challenges.

In a recent statement to the Emirates News Agency (WAM), Dr El Solh highlighted the UAE’s strategic location, robust infrastructure, and business-friendly policy as key factors attracting investors and fostering growth.

El Solh noted that the UAE’s Vision 2030 framework and forward-looking economic policy, emphasising diversification, innovation, and sustainability, have gained international acclaim. This has boosted confidence in the national economy, resulting in increased foreign investment, improved credit ratings, and enhanced global competitiveness.

Damian Hitchen, CEO of Saxo Bank in the Middle East and North Africa, expected the UAE’s economy to grow by over 4 percent in 2024, driven by OPEC’s increased oil production quota and momentum in non-oil sectors.

He added that the UAE’s attractiveness is reflected in its record $23 billion in foreign direct investment in 2022, reaching an all-time high. Additionally, the UAE ranks 14th globally in attracting professional talent, according to the Boston Consulting Group.

Hitchen highlighted the crucial roles of the tourism and aviation sectors in boosting the economy, enhancing trade, and transforming the UAE into a global transportation and logistics hub.

Vijay Valecha, Chief Investment Officer at Century Financial, anticipated the UAE’s economy will sustain robust growth exceeding 4 percent this year, supported by strong performances in non-oil sectors.

He underscored economic diversification away from oil, emphasising sectors like renewable energy, technology, financial services, tourism, construction, and real estate, which collectively drive over 70 percent of the UAE’s GDP. Valecha predicted the UAE will lead the Gulf and Arab countries in economic performance in 2024, credited to strategic initiatives and forward-looking policy.