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The International Monetary Fund (IMF) revised its growth forecast for the UAE, projecting GDP growth of 3.7% in 2024 and 4.5% in the medium term, down from an earlier forecast of 4% in 2024 in May, according to the 2024 IMF Article IV consultation report for the UAE. Still, the Fund expects growth to remain strong, driven by ongoing non-oil sector growth, government reforms, public spending, and increased oil production due to the Opec+’s hike of its production quota in 2025.
The IMF also revised its growth forecast downwards slightly for 2025 to 5%, down from 5.1% earlier.
Fiscal and external surpluses are expected to remain strong in 2024, fueled by high oil prices. Tax reforms are likely to support the fiscal surplus, though the current account surplus could dip due to higher reform-driven imports and stabilizing oil prices.
The banking sector remains resilient: Banks are seeing strengthened capital buffers, fewer non-performing loans, though they remain elevated in the construction sector, and steady credit growth, even with higher interest rates. Capital inflows are also pumping up reserves and liquidity, contributing to rising real estate prices — especially in Dubai’s high-end market.
Geopolitical risks such as tensions, economic slowdowns, and commodity volatility could impact growth, but sovereign buffers help mitigate these vulnerabilities. The IMF also highlights the importance of accelerating climate reforms to address long-term decarbonization challenges.
Policy recommendation: The IMF urges the UAE to strengthen macroprudential frameworks, finalize real estate exposure standards, and consider countercyclical capital buffers.
