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23 July 2024

CBUAE projects UAE’s real GDP growth to reach 6.2% in 2025


The Central Bank of the United Arab Emirates (CBUAE) expected the country's strong foreign trade performance to continue in 2024 and 2025, sustaining its projected growth for the UAE’s real GDP in 2024 at 3.9 percent, with expectations for it to further accelerate to 6.2 percent in 2025.

In its June 2024 Economic Quarterly Review, the apex bank said that country's non-hydrocarbon GDP growth is expected to remain strong at 5.4 percent in 2024 and 5.3 percent in 2025, with the hydrocarbon sector set to grow by 0.3 percent in 2024, followed by further expansion by 8.4 percent in 2025.

In the fourth quarter of 2023, the UAE economy expanded 4.3 percent YoY, above the 2.5 percent growth registered in Q3 2023. The quarterly increase is due to both, non-hydrocarbon growth accelerating (which accounts for around 75 percent of GDP) and better performance of the hydrocarbon sector.

These latest figures also showed that the consolidated fiscal balance in 2023 remained positive at AED85.6 billion, equivalent to 4.5 percent of GDP, with total revenue declining by 13.9 percent to AED526.1 billion (27.9 percent of GDP). Government expenditure increased by 3.1 percent to AED440.5 billion (23.3 percent of GDP), the report further added, noting that the fiscal sector remains sustainable and will be further strengthened as a result of the recently introduced corporate income tax.

Indicators point towards robust economic activity within the non-oil private sectors, the CBUAE said. As of April 2024, the UAE's Purchasing Managers' Index (PMI) was reported at 55.3, driven by continued business optimism on economic prospects. Such positive sentiment is driven by the expectation of ongoing robust demand and sales, expected to support consistent output growth. This is further supported by the anticipation of new initiatives and investments.

Dubai recorded a PMI of 55.1 in April 2024, reflecting persistent growth in the emirate's non-oil private sector.

According to the figures, the number of employees covered by the CBUAE Wage Protection System (WPS) and average employee salary increased by 7.5 percent and 9.4 percent YoY in April 2024, respectively. These positive readings for employment and wage growth point to robust domestic consumption and sustainable GDP growth going forward.

The real estate, tourism and hospitality sector, and transportation sectors collectively represent around 30 percent of the non-oil GDP, the report highlighted.

The number of residential real estate sales transactions in Abu Dhabi in January-April 2024 was estimated to have increased by 7.7 percent YoY. Growth was mostly driven by the sales of ready units, which increased by 24.9 percent YoY, while off-plan sales increased marginally by 0.8 percent YoY.

Data for Q1 2024 indicated that Dubai sustained its role as a top international tourism hub. The emirate's hotel occupancy rates stood at 83 percent, equal to the previous year's figures, while the average duration of stay per visitor was almost unchanged at 3.9 nights, yet there was a 2 percent YoY increase in the total occupied room nights, totalling 11.2 nights.

Furthermore, Dubai recorded an 11 percent rise in tourist arrivals in the first three months of 2024 compared to the same period last year, taking advantage of the revival of worldwide travel demand. During this period, the emirate welcomed 5.2 million international overnight visitors, an increase from 4.7 million tourists in the first quarter of the previous year.

Zayed International Airport welcomed over 6.8 million passengers in the first quarter of 2024, taking advantage of the top-tier facilities and services at its newly opened terminal in Abu Dhabi. This emphasises Abu Dhabi’s status as a major transportation hub, with a 36 percent increase in passenger numbers compared to the first quarter of 2023.

Dubai International Airport had an exceptional start in 2024, recording its busiest quarter ever, which highlights its importance as a global aviation hub and a major contributor to Dubai's economy. During the first quarter, there was a remarkable increase in passenger traffic, with 23 million travellers passing through its facilities. This represents an 8.4 percent rise compared to the same period last year, emphasising its strong connection to key global markets and its role in strengthening Dubai's status as a prime destination for both tourism and business.

Boosting its status as a global travel and tourism hub, Dubai approved an ambitious AED128 billion project for a new passenger terminal at Al Maktoum International Airport. This expansion will increase the size of Dubai’s main international airport five times, to become the largest in the world by size and capacity, capable of handling up to 260 million passengers annually.