UAE's Economy To Flourish: Central Bank Predicts GDP Growth Up To 5.2% By 2025

The Central Bank of the United Arab Emirates (CBUAE) has provided an optimistic forecast for the nation's economic trajectory, projecting a significant growth in the Gross Domestic Product (GDP) over the next two years. According to its latest quarterly economic review report for Q4 of 2023, the UAE's GDP is expected to see a rise from 3.1 percent in 2023 to 4.2 percent in 2024, eventually reaching 5.2 percent in 2025.

This positive outlook is further supported by expectations of a robust increase in non-oil GDP, with projections of 4.7 percent growth for both 2024 and 2025. The oil sector is not left behind, with anticipated growth rates of 2.9 percent in 2024 and an impressive 6.2 percent in 2025.

Highlighting the country's financial health, the CBUAE reported a surplus of AED61 billion for the first nine months of 2023, accounting for 4.4 percent of the GDP. This financial achievement is attributed to total revenues of approximately AED370 billion against expenditures of around AED309 billion.

The introduction of a federal corporate tax is expected to play a crucial role in bolstering government finances further. This move is seen as a strategic step towards diversifying revenue streams beyond the oil sector, ensuring a more stable economic foundation for the UAE.

Another key indicator of economic vitality is the strength observed in the non-oil private sector. The Purchasing Managers' Index (PMI) for January 2024 stood at 56.6, reflecting sustained business confidence and optimism about future economic prospects. This sentiment is underpinned by expectations of continued demand and sales, which are likely to fuel further production expansion and potentially usher in new projects and investments.

Specifically, Dubai's PMI mirrored this positive trend with a reading of 56.6, indicating ongoing growth within its non-oil private sector. Furthermore, employment and wage growth statistics provide additional evidence of a healthy economy poised for future consumption increases. The report notes a 3.1 percent rise in private sector employment and a significant 7.4 percent increase in wages during Q4 of last year compared to the same period in 2022.

These developments collectively paint a promising picture for the UAE's economic future, marked by diversified growth across both oil and non-oil sectors, enhanced government finances through strategic taxation, and an overall positive business climate fostering confidence among investors and entrepreneurs alike.

With inputs from WAM