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The World Bank maintained its GDP growth outlook for the UAE at 3.3% in 2024, keeping its the projection from its semi-annual report unchanged, according to the end-of-year Gulf Economic Update report (pdf). The forecast is attributed to the 4.1% expansion in the non-oil sector, driven by growth in tourism, real estate, construction, transportation, and manufacturing. Its forecast for 2025 and 2026 remained unchanged at 4.1%, supported by an expected recovery in oil production.
Current account surplus will continue to narrow next year: The country’s current account surplus will narrow to 7.5% in 2024, down from 9.2% last year, with a decline to 7.3% on average in 2025-2026. The UAE will maintain a fiscal surplus of 4.9% of GDP in 2024, supported by expanding non-oil revenues.
The employment-to-population ratio is projected to reach 80.3% in 2024, supported by policies promoting gender balance and female workforce participation.
ON A REGIONAL LEVEL-
The GCC economy is expected to grow by 1.6% in 2024, down from a semi-annual forecast of 1.9%. The region’s non-oil sector is expected to expand by 3.7% due to ongoing diversification efforts in finance, logistics, and tourism. Meanwhile, oil GDP contracted by 7.5% due to reduced oil output.
Optimism remains despite slower non-oil operations: Growth is expected to pick up to 4.2% in 2025-2026 as Opec+ crude production cuts ease, with non-oil GDP remaining resilient, though potentially growing at a slower rate in 2025 if lower oil prices lead to fiscal consolidation measures.
GCC inflation averaged 2.3% for the first nine months of 2024, on the back of tighter monetary policies, subsidies, lower global food prices, and currency stability, though it could go up in 2025 due to stronger economic growth and interest rate cuts.
The region is expected to shift from a fiscal surplus to a small deficit in 2024, driven by reduced oil revenues due to Opec+ production cuts. The region’s combined fiscal deficit is expected to be 0.1% of GDP in 2024, widening slightly to 0.2% in 2025-2026 due to lower oil revenues and higher expenditures.
