The UAE is poised to dominate the Gulf Cooperation Council’s economic performance in 2024, fueled by a favorable oil output quota and robust non-oil sector activities. Experts at Capital Economics project a 4.0% GDP growth, asserting UAE’s economic resilience amidst geopolitical challenges and uncertainties in global recovery.
A Favorable Oil Quota Supports UAE’s Economic Growth
As UAE steps into 2024, an advantageous oil output quota is set to bolster its economic growth. The oil GDP, a key player in this economic uplift, is ready to stage a strong comeback. This shift, coupled with a steady non-oil sector, has led experts to forecast a 4.0% overall GDP growth, positioning UAE as the best-performing Gulf economy.
Robust Growth Despite Economic Headwinds
Amid geopolitical turbulences and uncertain global recovery prospects, the International Monetary Fund (IMF) estimates a 3.9% expansion of the Emirates’ economy in 2024, compared to 3.6% in the current year. The World Bank also mirrors this optimism, predicting a 3.3% growth in 2023, largely driven by a buoyant domestic demand across tourism, real estate, construction, transportation, and manufacturing sectors.
Record Expansion and Twin Surpluses: A Look Back at UAE’s Economic Performance
The UAE’s economy demonstrated remarkable growth in 2022, expanding at 7.9%, the fastest rate since 2006. This expansion was supported by an 11% growth in the oil sector and a solid 6.0% growth in the non-oil sector. Despite lower oil prices and reduced oil production, the UAE is anticipated to maintain twin budget and current account surpluses in 2023, supporting a favorable fiscal policy.
Persistent Non-Oil Sector Activities Underpin Economic Growth
Strong fiscal policy is an underlying factor for robust activity in the non-oil economy. The UAE’s Purchasing Managers Index (PMI) remained close to multi-year highs in July 2023, indicating a potential non-hydrocarbon GDP growth of around 2.0% quarter-on-quarter in Q2 and the start of Q3.
The Oil and Non-Oil Economy: A Balancing Act in 2023
Despite strong non-oil economy activity, the impact of oil production cuts could not be completely offset in 2023. However, a bright forecast for 2024 suggests a more balanced performance between the oil and non-oil sectors.
Real Estate and Hospitality Sector Performance: Indicators of Economic Health
As per the report, residential prices in Dubai increased by 11% in June 2024, driven by strong demand. In contrast, prices in Abu Dhabi saw a modest rise of 2.0%. The hospitality sector, which recovered significantly post-pandemic, also contributes to UAE’s economic strength. Visitor arrivals exceeded pre-pandemic norms, and hotel performance indicators remained strong.
As we look ahead to 2024, the UAE is well-positioned to lead the Gulf’s economic performance, backed by strategic oil quota, consistent non-oil sector activities, and strong domestic demand.
For the hospitality industry, this economic upswing presents a golden opportunity. With visitor arrivals already exceeding pre-pandemic levels, the industry is primed for a strong recovery. Hotel performance indicators such as occupancy rates and daily rates per room further illustrate the sector’s promising trajectory.
BM Events stands ready to support this resurgent hospitality industry. As a provider of on-demand staffing, our mission is to equip the hospitality sector with the resources it needs to capitalize on the projected economic growth. Our team of professionals is committed to delivering top-notch service to drive your business to new heights.