Abu Dhabi September 26 2024: The Central Bank of the UAE (CBUAE) revised upwards its GDP growth projection for 2024 to 4 percent from 3.9 percent previously, reflecting the improved performance of the oil sector.
For 2025, growth is expected to increase to 6 percent, as momentum in the non-hydrocarbon sector is projected to continue, while hydrocarbon production is forecast to pick up significantly.
According to the Quarterly Economic Review issued by the apex bank on Wednesday, growth forecasts continue to be driven by tourism, transportation, financial and insurance services, construction and real estate, and communications sectors; while the current levels of oil production during 2024 partially moderate the overall growth.
Non-hydrocarbon GDP growth is expected to remain strong at 5.2 percent in 2024 and 5.3 percent in 2025, resulting mainly from the strategic plans and policies that the government has undertaken to attract foreign investments and support the growth of activities with biggest contribution to the non-oil GDP and the ongoing structural reforms such as 100 percent ownership of foreign businesses, tax reforms, etc.
The hydrocarbon sector is expected to grow by 0.7 percent in 2024, followed by further expansion by 7.7 percent in 2025
The fiscal balance for the first quarter of 2024 remained positive at AED23.5 billion, representing 4.9 percent of GDP, compared to AED23.2 billion or 5.1 percent of GDP in the first quarter of 2023.
Consolidated budget revenue in January-March 2024 increased by 4.3 percent Y-o-Y, reaching AED120.6 billion, or 24.9 percent of GDP. This growth was primarily driven by a significant 32.5 percent Y-o-Y rise in tax revenues.
The UAE’s fiscal conditions have become more stable, as evidenced by the growing share of tax revenue in total revenue, which rose from 45.8 percent in Q1 2022 to nearly 70 percent in Q1 2024. This shift is largely attributable to the recently introduced corporate tax.
Government expenditure in the first quarter of 2024 totaled AED 97.1 billion, or 20 percent of GDP, reflecting a 5 percent year-on-year increase. Major expenditure categories, including compensation of employees (AED 30.3 billion), use of goods and services (AED 25.9 billion), and social benefits (AED 16.8 billion), rose by 6.3 percent, 15.2 percent, and 3.4 percent year-on-year, respectively. Additionally, capital expenditure saw a significant increase, more than sevenfold, reaching AED5.6 billion.
Number of employees covered by the CBUAE Wage Protection System (WPS) remained almost flat Y-o-Y in June 2024, while average employee salary increased by 4.8 percent Y-o-Y. These positive readings for employment and wage growth point to robust domestic consumption and sustainable GDP growth going forward.
The 16 non-oil sectors continued their robust growth pattern in Q2 2024, albeit at a more moderate rate. Wholesale and retail trade, manufacturing and construction continued to be some main pillars of the non-oil sector expansion.
In the wholesale and retail trade sector, the different CEPA agreements and the visa reforms, among others, resulted in increasing trade volumes and number of transactions. The manufacturing sector, continued to attract greater levels of FDI, expanding in line with “Operation 300 billion”. The construction sector witnessed growth, with many new and ongoing infrastructure projects taking place, such as Etihad Rail, Dubai Creek Harbor.
