WHAT DINA THINKS: The United Arab Emirates' Momentum and Projections for 2024

Hey expats! I have some good news for you! 

The latest Economic Insight report, commissioned by ICAEW and compiled by Oxford Economics, forecasts an impressive doubling of the UAE's GDP to 4.8 percent in 2024, signaling an upward trajectory from the 2.4 percent recorded in 2023.

While short-term growth may encounter hurdles due to OPEC+ production quotas, the UAE's higher reference quota hints at a potential relaxation of these limitations in 2024.

Current estimates for the UAE's oil production hover at 3.28 million barrels per day, marginally lower than the previous year. Despite this, the UAE consistently surpasses its OPEC target, sustaining production levels of around 3.25 million bpd. 



This trend is anticipated to persist, with projections indicating an average output of 3.35 million bpd in 2024, poised to further rise to 3.6 million bpd in 2025. However, this robust output still falls notably short of the UAE's maximum capacity, which sits at around 4.5 million bpd.

In alignment with its economic development strategies, the UAE actively pursues non-oil sector expansion. The successful $1.5 billion sovereign bond sale bolsters these endeavors, aiming to diversify and strengthen the nation's economic framework.

The upcoming integration into the BRICS block in January signifies a significant milestone for the UAE, promising amplified trade and investment prospects that bolster its growth strategy. Industries such as logistics, technology, infrastructure, and finance are poised to reap substantial benefits from this integration.

Despite an anticipated slight easing in non-oil GDP growth to 3.8 percent in 2024 from this year's 5.2 percent, the UAE's economic landscape remains promising. The Q2 year-on-year GDP expansion of 3.7 percent, predominantly propelled by a robust non-oil sector, exemplifies this strength.

The PMI's recent climb to 57.7 in October stands as a testament to the UAE's non-oil economy's resilience and sustained growth post-pandemic.

Remarkably, credit growth in the UAE has defied regional trends, witnessing an upturn this year, particularly in retail loans, which soared by nearly 10 percent year-on-year despite increased borrowing costs.

The fiscal outlook remains positive, with projected fiscal surpluses surpassing 5 percent of GDP in the near and medium term. In 2022, the UAE boasted a fiscal surplus exceeding 9 percent of GDP, attributed largely to significant revenue growth fueled by higher oil revenues.

This fiscal robustness, coupled with the burgeoning non-oil sector, fortifies the UAE's fiscal resilience, ensuring a stable alternative revenue stream.

I think that the UAE's strides in green sukuk financing underscore its commitment to sustainable projects and its transition towards achieving net-zero targets. Intensified efforts are expected as the UAE furthers its commitment to fulfilling net-zero obligations.

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