Economists are optimistic that the UAE is poised for robust growth in the fourth quarter of this year, driven by factors such as population growth, government expenditure, and expansion in various non-oil sectors, including transportation, travel, tourism, trade, and hospitality.
The Central Bank of the UAE has forecasted a 3.3 percent growth rate for 2023 and an even higher 4.3 percent for 2024. In line with this, the International Monetary Fund (IMF) predicted an expansion of 3.4 percent for the UAE's economy in 2023 and 4.0 percent in the following year.
Khatija Haque, head of research and chief economist at Emirates NBD Research, noted that key hotel indicators indicate a full recovery from the pandemic, with occupancy and revenue per available room surpassing pre-Covid levels. She also highlighted that the outlook for the upcoming high season is encouraging, with many hotels reporting full bookings through Q4 2023, driven by events like COP28 in Dubai and strong reservations for early 2024.
James Swanston, an economist specializing in the Mena region at Capital Economics, emphasized that the UAE's non-oil sector has demonstrated considerable strength throughout this year. The country's non-oil foreign trade set a new record at Dh1.239 trillion in the first half of 2023, marking a 14.4 percent growth compared to the same period in 2022.
Furthermore, the GDP data for Dubai in the second quarter indicated another expansion in output, with real GDP growth reaching 3.2 percent in the first half of 2023.
However, there are some cautionary notes for 2024. Higher interest rates, which have gradually increased post-pandemic, may eventually impact non-oil growth. Yet, the lag time and variability of this effect on the real economy remain uncertain. The prospect of sustained government investment in strategic growth sectors is expected to offset potential softness in private sector investment in the coming year. Government-backed infrastructure projects and plans are substantial, with billions allocated for development and completion in the coming years.
In conclusion, non-oil sector growth is expected to dip slightly from an estimated 5 percent this year to around 4 percent in 2024. Additionally, a relaxation of current constraints on oil production in 2024 is anticipated, allowing the hydrocarbons sector to contribute positively to the overall GDP growth, projected at 3.6 percent for the UAE in 2024.