UAE Economy Expected to Experience a Boost in Growth Thanks to Recovery of Oil Sector
The UAE’s economy is expected to experience a significant boost in growth in the coming year, driven by the recovery of the oil sector. According to a report from BMI Research, a subsidiary of Fitch Solutions, the country’s real GDP growth rate is projected to increase from 3.3% in 2023 to 4% in 2024. This growth will be seen in both Abu Dhabi and Dubai, with Abu Dhabi’s growth recovering from 3% to 3.8% and Dubai’s growth accelerating from 3.6% to 3.9% in 2024.
The gradual easing of supply restrictions by OPEC+ and a predicted increase in Brent prices are expected to drive expansion in the oil sector and boost hydrocarbon exports. However, despite this positive outlook, public finance and current account surpluses are predicted to shrink due to diversification efforts that will lead to increased spending and imports.
The UAE’s fiscal surplus is expected to slightly decrease from its current level of 5.6% of GDP, but it will still allow for continued accumulation of foreign assets and debt repayment. Economic diversification plans, particularly those focused on non-oil sectors, will be key drivers of growth for the country moving forward. The signing of Comprehensive Economic Partnership Agreements is also expected to further support export growth in the coming years.
Despite some potential risks such as high inflation and geopolitical conflicts, the overall outlook for the UAE’s economy remains optimistic for the next ten years. The country is expected to have the fastest average growth rate among Gulf Cooperation Council countries and continue its position as a major player in global trade and finance markets.
In conclusion, while challenges remain, such as inflationary pressures and geopolitical tensions impacting trade flows, there are opportunities for sustained economic growth driven by diversification efforts, strong export performance, and continued investment in infrastructure projects like Al Maktoum Airport expansion.
Overall, it seems that despite some concerns about inflationary pressures or geopolitical tensions impacting trade flows or supply chains disruptions due to COVID-19 pandemic effects on travel restrictions or any other factors affecting oil prices globally; there are still significant opportunities for sustained economic growth driven by diversification efforts, strong export performance and continued investment in infrastructure projects like Al Maktoum Airport expansion.
