The UAE is set to maintain its position as the GCC region's economic growth leader in 2024 and 2025, fueled by non-oil sectors and foreign direct investments, according to a global think-tank.
A study released by the Institution of International Finance (IIF) forecasts that the UAE economy will expand by 4.0 per cent in 2024 and 5.1 per cent in 2025, outpacing all other GCC nations. In 2023, the Emirates' GDP grew by 3.6 per cent, making it the fastest-growing economy in the Gulf region. The country's non-oil GDP growth is expected to moderate in 2024 and 2025 after a robust 6.2 per cent increase in 2023, but it will still lead the region.
Garbis Iradian, chief economist for Mena and Central Asia at IIF, noted that the UAE’s current macroeconomic performance and near-term outlook remain positive, with risks well-managed. “The economy will sustain robust growth of around 4 per cent in 2024 and 2025, bolstered by continued strong domestic demand. Dubai’s growth is primarily driven by tourism and hospitality. Inflation is projected to drop further to 2 per cent in 2025, supported by lower global commodity prices and manufacturing costs,” Iradian stated in a report on regional economies.
IIF anticipates that the UAE will maintain a modest expansionary fiscal policy stance, given its substantial financial reserves and spare capacity. “The ongoing improvement in non-oil government revenues, coupled with an increase in oil exports, will help reduce the fiscal breakeven oil price to below $65 a barrel in 2025. The general government debt-to-GDP ratio is expected to decline further to 16 per cent of GDP in 2024,” Iradian added.
The UAE has established clear objectives to foster diversified and knowledge-based growth, aiming to build a competitive, knowledge-driven economy. A wide array of policy reforms is being implemented to achieve these goals, which will enhance productivity and increase the supply of highly skilled labor, thereby boosting potential growth.
The UAE continues to be the primary regional destination for FDI inflows, attracting approximately $30 billion in 2023, accounting for 6 per cent of GDP, the highest among emerging economies. “The favorable business environment, superior infrastructure, and diversified economy by regional standards have supported high FDI levels. The UAE’s enhanced appeal to international investors is due to strategic reforms, such as allowing 100 per cent foreign ownership in specific sectors, strengthening intellectual property protections, and simplifying licensing processes,” Iradian concluded.
Source link: https://www.khaleejtimes.com
