Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
The UAE outperformed its GCC peers in the real non-oil growth in 2023 and the first half of 2024.
According to the data from the latest Middle East Economy Watch released by the PWC Middle East, the UAE's non-oil economy expanded at a rate of 6.2% in 2023, surpassing the growth rates of Saudi Arabia (3.5%), Qatar (1.1%), Bahrain (4%), and Oman (1.8%), respectively.
The GCC region reported an aggregate growth of 3.6% in the non-oil sector, the PWC report said. The UAE’s stellar performance in 2023 was particularly aided by the spectacular 9.1% expansion in Abu Dhabi's economy.
Commenting on spectacular performance in 2023, Vijay Valecha, Chief Investment Officer at Century Financial, said Abu Dhabi's economy demonstrated remarkable resilience, achieving a record gross domestic product (GDP) of Dh1.14 trillion—the highest value in a decade.
Highlighting the impressive numbers from the Abu Dhabi economy, Valecha said: “The growth was driven by robust performance of the non-oil economy, which accounted for over 53% of the total GDP. Non-oil economic activities surged by an impressive 9.1%, contributing to the 3.1% growth in Abu Dhabi's real GDP in 2023. In the fourth quarter alone, the economy expanded by 4.1% year-over-year, driven by a remarkable 10.4% growth in non-oil sectors”.
The 2023 performance of Abu Dhabi is a testament to the successful implementation of strategic initiatives aimed at establishing a diverse and resilient economy, Velecha said.
The first half of 2024 also looks promising for the UAE and its Gulf neighbours. The UAE reported a growth of 4% in the non-oil sector, whereas Saudi Arabia saw a growth of 3.7%, Oman 3.8% and Bahrain 3.2%. Kuwait made a spectacular comeback with 4.7% growth after a 2.9% contraction in 2023.
The PWC report noted some signs of a slowdown in the recent Purchasing Manager Indices (PMIs).
Though indices are expansionary more, some softening was noticed in Saudi Arabia and the UAE with a slowdown in output and orders due to a rise in input costs. However, the increasing tourist numbers of 6% with Year on Year (YoY) growth in Dubai visitors augurs well for the second half of 2024.
The UAE is also on firm footing on account of fiscal surpluses. The UAE posted a strong fiscal surplus of 4.9% in the first half of 2024 and 7.6% in 2023. Qatar is another good performer, reporting a surplus of 1% in the first half of this year and 5.4% in 2023, followed by Oman with 1.8% in H1 2024 and 2.2% in 2023. Saudi Arabia, Kuwait and Bahrain reported fiscal deficits varying from 1.3% to 4.8% for these two periods. The decline in oil prices is one primary cause for these fiscal deficits despite better figures in non-oil growth. The GCC region as a whole reported an aggregate fiscal surplus of 1.2%.
The PWC report highlighted two positive developments on the economic front. Firstly, it stated that Egypt has experienced a remarkable economic turnaround this year, following a $35 billion investment from the UAE. This has enabled the implementation of important reforms, including liberalisation of the currency regime. As a result, Egypt has managed to unlock additional funding from multilateral institutions and a more positive view of the market, leading to lower government debt yields.
The second positive development for the region is its growing leadership in the global AI evolution. “A combination of robust infrastructure, strategic government leadership and capital have come together to make the GCC an attractive destination for CEOs of leading AI firms,” the PWC report said. The report concluded that the region is also well positioned to reap some of the economic benefits of AI, enhancing efficiency and driving innovation across various sectors.
