The Central Bank of the United Arab Emirates (CBUAE) has maintained its forecast for the UAE’s real GDP growth in 2024 at 4.0%, expecting further acceleration to 4.5% in 2025 and 5.5% in 2026, according to the Quarterly Economic Review – December 2024 released on December 23, 2024.
Drivers of 2024 Economic Growth
Economic growth in 2024 is projected to stem from robust performances across key sectors, including – tourism, transportation, financial and insurance services, construction and real estate.
Non-oil GDP, a key metric of diversification, grew by 4.8% year-on-year (YoY) in Q2 2024, compared to 4.0% YoY in Q1. This uptick was primarily driven by the expansion of – manufacturing, trade, transportation & storage and real estate activites.
The non-oil GDP growth rate is expected to remain strong at 4.9% in 2024 and 5.0% in 2025, underpinned by government-led initiatives to attract foreign direct investment (FDI) and promote economic diversification.
Non-Oil Sector Performance
In Q3 2024, the UAE’s 16 non-oil sectors continued their steady growth trajectory. Key contributors included wholesale & retail trade, manufacturing and construction as top verticals.
The manufacturing sector benefited significantly from rising FDI and alignment with federal and emirate-level strategies, while the construction sector experienced strong momentum during the first nine months of 2024, driven by large-scale infrastructure projects.
Additionally, the UAE’s comprehensive economic partnership agreements (CEPAs) with various nations bolstered trade partnerships. As a result, non-oil trade exceeded AED1.3 trillion in H1 2024, reflecting a 10.6% YoY increase. This milestone accounts for 134% of GDP, emphasizing the success of the UAE’s diversification agenda.
Oil Sector Growth and Fiscal Health
Oil production averaged 2.9 million barrels per day in 2024 and is expected to grow by 1.3% this year, with further acceleration to 2.9% in 2025.
Fiscal performance has also been robust with H1 2024 fiscal surplus reaching AED65.7 billion which is 6.7% of GDP, marking a 38.8% increase YoY. Additionally, general government revenue reached AED 263.9 billion (26.0% of GDP), up 6.9% YoY, driven by a 22.4% YoY rise in tax revenues. Capital expenditure reached AED11 billion, up 51.7% YoY, reflecting the government’s focus on infrastructure development.
Private Sector Growth and Employment
Economic activity in the UAE’s non-oil private sector remains robust, supported by sustained business confidence:
- The Purchasing Managers’ Index (PMI) reached 54.1 in October 2024, signaling optimism for continued demand and sales growth.
- Dubai’s PMI closely followed, at 53.2, reflecting steady growth in the emirate’s non-oil economy.
Indicators of employment and wages further highlighted economic resilience:
- The number of employees under the Wages Protection System (WPS) grew by 4.0% YoY in September 2024.
- The average employee salary increased by 7.2% YoY, boosting domestic consumption and contributing to sustainable GDP growth.
The UAE’s growth trajectory remains positive, driven by a combination of government-led diversification policies, strategic international partnerships, and strong private sector performance. With non-oil sectors expanding rapidly and fiscal health improving, the CBUAE projects sustained momentum in the coming years. Upcoming investments and initiatives are expected to reinforce the UAE’s position as a key player in the global economy, ensuring robust growth across all sectors.