The UAE is poised to remain the Gulf's top economic performer in 2024-2025, despite a slower start to the year. A strong non-oil sector is expected to keep the region's star economy at the forefront.
Earlier this year, the UAE's Central Bank predicted a robust 4.2% growth for 2024, with an even higher 5.2% expected in 2025, largely driven by non-oil GDP. The IMF also raised its forecast in May, predicting a 4% GDP increase, up from 3.5% in the previous month.
UAE Maintains Lead as Gulf's Economic Powerhouse
Recently released Q1 2024 GDP data from Dubai and Abu Dhabi indicated a somewhat slower start to the year. Dubai’s economy grew by 3.2% year-on-year in Q1, while Abu Dhabi saw a drop from 4.1% YOY in Q4 2023 to 3.3% YOY in Q1 2024. Both oil and non-oil sectors experienced declines, impacting the overall national performance.
According to the MENA region economist at Capital Economics, the UAE’s GDP is expected to grow by 3.3% this year as private non-oil activity slows and oil output remains limited. Despite these challenges, the UAE is still projected to hold its position as the Gulf's leading economy.
Gulf Economies Anticipate Stronger Performance Ahead
In the recent OPEC+ meeting, the group agreed to maintain oil output levels until October, with plans to gradually ease voluntary cuts afterward. As oil output increases, Gulf economies are expected to see improved performance in the coming quarters.
"The recent dip in oil prices may delay the planned output increases," noted the Capital Economics economist, but they also highlighted that the oil sector is likely to bolster the UAE economy, contributing to a rise in oil GDP in the near future.
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