World Bank Forecasts Robust Non-Oil Sector Growth To Fuel UAE's Economy In 2024

The UAE is set to witness a significant upturn in its real gross domestic product (GDP) growth, anticipated to reach 3.9% in 2024. This optimistic forecast is primarily attributed to the Organisation of the Petroleum Exporting Countries Plus (OPEC+)'s decision to increase oil production substantially in the latter half of 2024, coupled with a resurgence in global economic activities. These insights were revealed in the Spring 2024 Gulf Economic Update (GEU) by the World Bank.

According to the report, the oil sector is expected to see a growth of 5.8% in 2024. Concurrently, the non-oil sector will also exhibit robust growth, contributing significantly to the economic expansion with a forecasted growth rate of 3.2%. This surge is driven by the strong performances across various sectors including tourism, real estate, construction, transportation, and manufacturing.

The GEU further elaborates on the UAE's strategic initiatives to foster economic growth, highlighting the nation's commitment to sustainable, green, and digital growth. The UAE's strategic spending and development initiatives have played a pivotal role in maintaining a strong current account surplus, recorded at 9.1% of GDP. This financial health is bolstered by a rise in non-oil exports, particularly in tourism and commercial services, alongside enhanced new investments and trade agreements with crucial Asian and African markets.

The World Bank's report also shed light on the financial reserves within the Gulf Cooperation Council (GCC) countries, noting a significant growth in 2023, with the UAE standing out due to its substantial economic growth throughout the year. The report underscores the improvement in the external balances of GCC countries over the past decade, largely influenced by the oil and gas sector and the growth of non-oil exports, ensuring that financial reserves remain at comfortable levels.

Highlighting strategic investments aimed at diversifying the economy and enhancing industrial capabilities, the report mentions the UAE's approval of a US$10 billion investment in tourism infrastructure and the initiation of a large public-private partnership portfolio valued at US$10.9 billion. Key investments include Abu Dhabi's significant allocation towards tourism infrastructure, ADNOC Gas's ambitious US$13 billion gas expansion plan over the next five years, and Dubai's substantial public-private partnership portfolio.

In addition to these economic developments, the GEU confirms a recovery in employment levels to pre-pandemic figures within the UAE. The report also notes the reinforcement of the Emiratisation strategy, with a new budget of US$1.74 billion aimed at integrating 36,000 citizens into the private sector by 2024, marking a significant stride towards enhancing local employment opportunities.

The World Bank's Spring 2024 Gulf Economic Update offers a promising outlook for the nation's economy, underpinned by robust oil and non-oil sector growth, strategic development initiatives, and a commitment to diversifying the economic landscape.