Today's Edition
MOHAMMAD GHAZAL (ABU DHABI)
The UAE’s economic growth is expected to reach 3.9% in 2024, the highest expected growth among the Gulf Cooperation Council (GCC) countries where this year’s economic growth is forecast to reach 2.8%, higher than the projected growth globally, according to the World Bank’s latest Global Economic Prospects report.
The UAE’s economic growth is projected to stand at 4.1% in 2025 and 4% in 2026, according to the report obtained by Aletihad.
“Real GDP growth in the UAE is projected to accelerate to 3.9% in 2024, fuelled by OPEC+'s announced significant oil production hike in the second half of 2024 and a recovery in global economic activity,” according to the recently released Spring 2024 Gulf Economic Update (GEU).
“Oil output growth is projected to reach 5.8% in 2024. Non-oil output will remain robust and continue to support economic growth in 2024, expanding at 3.2%, driven by strong performance in the tourism, real estate, construction, transportation, and manufacturing sectors,” the GEU indicated.
According to the report, the UAE is actively pursuing a series of structural reforms and strategic investments to diversify its economy and enhance industrial capabilities. Major initiatives include Abu Dhabi’s $10 billion investment in tourism infrastructure, and ADNOC Gas’ $13 billion plan for global and domestic expansion over the next five years.
In Dubai, a substantial $10.9 billion public-private partnership portfolio was approved, and a 20% tax was imposed on the annual taxable income of foreign banks operating in the emirate, except for those licensed in the Dubai International Financial Centre.
Additionally, the UAE’s Emiratisation strategy is bolstered by a new $1.74 billion budget aiming to integrate 36,000 citizens into the private sector by 2024.
In the UAE, the introduction of a 9% federal corporate tax in July 2023 is expected to expand the share of non-oil revenues, which together with stronger oil revenues will sustain the fiscal surplus at 5.1% of GDP, the highest among other GCC peers in 2024, according to the GEU.
Regionally, the global report, released Tuesday, showed that economic growth for 2024 is projected to reach 2.5% in Saudi Arabia, 2.6% in Bahrain, 1.5% in Oman, 2.1% in Qatar, and 2.8% in Kuwait.
According to the global report, growth in the Middle East and North Africa (MNA) is expected to pick up to 2.8% in 2024 and 4.2% in 2025, mainly because of a gradual increase in oil production and strengthened activity since the fourth quarter of 2024. The projection for 2024 is lower than what was expected in January, reflecting the extensions of oil production cuts and the ongoing conflict in the region.
The global economy is expected to stabilise for the first time in three years in 2024 — but at a level that is weak by recent historical standards.
Global growth is projected to hold steady at 2.6% in 2024 before edging up to an average of 2.7% in 2025-26. That is well below the 3.1% average in the decade before COVID-19.
The forecast implies that over the course of 2024-26, countries that collectively account for more than 80% of the world’s population and global GDP would still be growing more slowly than they did in the decade before COVID-19.
Global inflation is expected to moderate to 3.5% in 2024 and 2.9% in 2025, but the pace of decline is slower than was projected just six months ago. Many central banks, as a result, are expected to remain cautious in lowering policy interest rates. Global interest rates are likely to remain high by the standards of recent decades — averaging about 4% over 2025-26, roughly double the 2000-19 average.
“Four years after the upheavals caused by the pandemic, conflicts, inflation, and monetary tightening, it appears that global economic growth is steadying,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President.
“However, growth is at lower levels than before 2020. Prospects for the world’s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities, and costly climate events. Developing economies will have to find ways to encourage private investment, reduce public debt, and improve education, health, and basic infrastructure. The poorest among them — especially the 75 countries eligible for concessional assistance from the International Development Association — will not be able to do this without international support.”
