The UAE is set to maintain its position as the leading economy in the Gulf region this year and next, despite a modest beginning in early 2024. "The UAE has demonstrated the most robust economic performance in the Gulf over the past year, and its strong non-oil sector is expected to keep it at the forefront of regional economic growth," stated James Swanston, a Mena region economist at Capital Economics. Recent GDP figures for the first quarter of 2024 from Abu Dhabi and Dubai indicated a softer start to the year. Abu Dhabi's economic growth decelerated from 4.1 percent year-on-year in Q4 2023 to 3.3 percent in Q1 2024. The first-quarter data for Abu Dhabi revealed a slowdown in both oil and non-oil sectors. Oil production levels seem to have remained stable compared to Q1, with a slight improvement from -4.2 percent year-on-year in Q1 to -1.0 percent in Q2, marking the quickest oil output growth since Q1 2023, according to Capital Economics. Meanwhile, Dubai's growth slightly declined to 3.2 percent. "Considering these are the two largest Emirates, it's reasonable to infer that national growth also slowed," noted Swanston. "We anticipate the UAE's economy to expand by 3.3 percent this year due to a slight softening in private non-oil economic activity and constrained oil output. Nonetheless, this would still position the UAE as the fastest-growing economy in the Gulf. With an expected increase in oil output next year, we foresee GDP growth surging to a higher-than-expected 5.5 percent in 2025, reinforcing the UAE's status as the region's fastest-growing economy," he continued. The Central Bank of UAE earlier this year forecasted robust growth of 4.2 percent for 2024 and an even stronger rate of 5.2 percent for the following year, primarily driven by non-oil GDP. Similarly, the IMF projected around 4 percent GDP growth for 2024 in May, an upward revision from its April forecast of 3.5 percent. At the latest Opec+ meeting, the group decided to maintain oil output levels until October and to gradually lift voluntary output cuts afterwards. "The UAE secured a favorable increase to its base production quota effective January 2025. The recent drop in oil prices could delay planned output increases. However, the oil sector will bolster the UAE's economy and lead to a significant acceleration in oil GDP growth in the coming quarters," explained Swanston. Capital Economics noted in another report that Gulf economies are likely to see an uptick in growth in the coming quarters, especially as oil output begins to rise from October. "The economic outlook will become more demanding from 2025 as oil prices decline and it becomes harder to maintain loose fiscal policies. Outside the Gulf, macroeconomic imbalances are diminishing. However, this hinges on governments continuing reforms and maintaining strict policies, which will impact the speed of recoveries," it concluded.