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03 October 2023

Central Bank maintains its forecast for the growth of the UAE economy by 4.3% in 2024


The Central Bank of the United Arab Emirates (UAE) maintains its expectations for the country's overall real GDP growth at 4.3% in the upcoming year 2024, with non-oil sector growth at 4.6% and the oil sector at around 3.5%.

In its quarterly review report for the first quarter of the current year, the Central Bank stated that the UAE economy continued to grow at a strong pace during the first quarter of the current year, supported by the robust performance of the non-oil sector. It expects the country's overall GDP to grow by 3.3% in 2023.

The Central Bank projected that the non-oil sector would grow by 4.5% in 2023, thanks to the acceleration of private and public investments during the remaining period of the year, as well as the anticipated growth in the travel and tourism sector.

The report indicated that the private sector continued to demonstrate strong dynamism, benefiting from multiple decisions to increase inflows of foreign direct investments and attract top talents.

It mentioned that the UAE's private non-oil sector purchasing managers' index showed expansion for the twenty-eighth consecutive month, reaching 55.9 in March last year and averaging 55.3 in 2022. It also highlighted that new business growth in the country recorded its fastest pace since October last year, encouraging companies to purchase inputs at the strongest rate in five years.

The report further explained that the Dubai purchasing managers' index showed an increase in growth momentum at the end of the first quarter of the current year, with companies expanding their capacities to support production expansion. This was reflected in a stronger increase in employment and inventory, with growth rates reaching record numbers over several years.

It noted that domestic consumption performed well during the first quarter of the current year, supported by significant increases in employment. The average total monthly amount for employees in the UAE and wages paid in the private sector recorded double-digit annual growth during the first quarter of 2023, with levels and growth higher than pre-COVID-19 levels.

According to the Central Bank's report, the purchasing managers' index survey showed a flourishing private non-oil sector job market in March last year, with accelerated growth in new orders leading to the fastest increase in employment since July 2016.

It pointed out that the banking sector continued to support private sector investment, with credit to the private sector increasing by 5.9% on an annual basis in the first quarter of the current year.

The report highlighted that the hospitality sector witnessed significant growth during the first quarter of the current year, driven by tourist inflows primarily from India, Russia, and Oman. It stated that the number of tourists traveling to Dubai reached 4.7 million during the first quarter, an increase of 700,000 compared to the same period last year. Additionally, the number of hotel guests in Abu Dhabi increased by 34% to 1.2 million guests during the first quarter.

It added that the civil aviation sector in the UAE successfully recovered its pre-COVID-19 passenger traffic levels, as the country's airports welcomed up to 31.8 million passengers during the first quarter, an increase of 11.5 million passengers compared to the same period last year.

The report mentioned that the cumulative investment volume in the UAE's civil aviation sector exceeded one trillion dirhams, while the investment in airport development and expansion reached around 85 billion dirhams to accommodate more than 300 million passengers annually.

It highlighted that the aviation sector in the UAE directly or indirectly contributes about 14% to the country's GDP, compared to 2% to 3% in major emerging markets and advanced economies.