Scott Livermore, ICAEW Economic Advisor and Chief Economist and Managing Director of Oxford Economics Middle East, projected that the UAE economy will expand to 4.8 per cent in 2025.

In a statement to the Emirates News Agency (WAM), Livermore attributed the expansion of the non-oil economy, which is expected to grow by 4.6 per cent year-on-year in 2024.

He added that non-oil sectors, mainly travel and tourism, will continue to grow strongly, with visitors to Dubai and traffic through DXB reaching record levels. “We expect visitors numbers to continue to expand strongly, growing by over 20 per cent this year and achieving double-digit growth again next,” he said.

Livermore added that the country has faced some challenges, particularly significantly higher interest rates; its economy has weathered the challenge due to the government support as growth and diversification plans are implemented.

“Investment activity is expected to be strong in the UAE as plans around ‘We the UAE 2031’, D33 in Dubai, and other strategies are implemented,” he explained.

He also emphasised that the UAE is increasing its attractiveness to foreign investors and talent through schemes such as allowing 100 per cent foreign ownership of onshore companies and lowering costs to establish businesses, which have contributed to population growth and bolstered the real estate market.

He noted that policymakers also focus on innovative and emerging sectors across finance, creative industries, manufacturing, and other sectors.

Regarding US Federal Reserve interest rates, Livermore said, “We expect the Fed to cut interest rates in September, and it is shifting its focus to the labour market away from inflation, that the Fed is no longer laser-focused on inflation and the risks to the labour market are on its radar.

“We expect the Fed to cut by 50bps by end-2024 and 150bps by end-2025 but the rates cuts could be more frontload if the labour market deteriorates more markedly than we are assuming.”

Livermore also expected the world economy to grow by 2.7 per cent this year and next, noting, “We believe the growing concerns that the US might be slipping towards a recession are unfounded and think recent news remain consistent with a more orderly and benign growth slowdown.”

Meanwhile the latest ICAEW Economic Insight report for the Middle East, prepared by Oxford Economics, said that the GCC region is poised for a significant rebound, with growth projected to more than double to 4.4 per cent in 2025.

The report highlighted that while economic growth in the Middle East is projected at 2.1 per cent in 2024, a significant acceleration to 3.7 per cent is expected in 2025.

The report emphasised the resilience of the GCC’s non-energy sectors, which are expected to expand by 4.2 per cent this year and 4.4 per cent in 2025.

Recent PMI readings suggest strong domestic activity, and anticipated interest rate reductions are expected to further bolster consumption and private investment. These sectors, including tourism, trade, and finance, are becoming crucial growth drivers in the region’s economic diversification efforts.

Scott Livermore, ICAEW Economic Advisor, and Chief Economist and Managing Director, Oxford Economics Middle East, said, “The GCC’s proactive and strategic investment in non-oil sectors, alongside the gradual recovery of oil production, is paving the way for robust growth in 2025, where the resilience of the GCC stands out.”

Hanadi Khalife, Head of Middle East of ICAEW, said, “The report underscores the importance of resilience in navigating global economic and regional geopolitical headwinds. We are confident that the Middle East’s business community, supported by the expertise of the accountancy profession, will continue to demonstrate its ability to innovate and thrive amid these challenges.”

Meanwhile Alia Bint Abdulla Al Mazrouei, UAE Minister of State for Entrepreneurship, held a roundtable recently with 20 directors and CEOs of venture capital funds. The meeting was aimed at enhancing cooperation to support the development of the UAE’s entrepreneurial ecosystem and the growth of startups by promoting their expansion into new economic sectors. This will be achieved through equipping them with necessary skills to enhance their chances for securing funding, partnerships, investment opportunities, and engagement with domestic and foreign investors.

Agencies