The United Arab Emirates (UAE) is gearing up for a remarkable economic surge, with the Central Bank of the UAE (CBUAE) anticipating a substantial 5.2 percent growth in the gross domestic product by 2025. This optimistic projection follows a string of positive economic indicators outlined in the quarterly economic review for the fourth quarter of 2023.
According to the CBUAE, the UAE’s GDP is poised to soar by 4.2 percent in 2024, before experiencing a significant acceleration to 5.2 percent the following year. This trajectory marks a commendable progression from the bank’s earlier estimate of a 3.1 percent expansion in 2023.
Breaking down the expected shift, the CBUAE forecasts a robust 4.7 percent rise in non-oil GDP for both 2024 and 2025. The outlook for oil GDP is equally promising, with growth projected at 2.9 percent for 2024 and a notable jump to 6.2 percent anticipated for 2025.
Financially, the UAE has demonstrated resilience and fiscal prudence, with a surplus of 61 billion dirhams ($16.6 billion) recorded in the first nine months of 2023. This surplus, equivalent to 4.4 percent of GDP, underscores the nation’s sound financial footing, supported by robust revenues and prudent expenditure management.
The introduction of a federal corporate tax is expected to further bolster government finances, diversifying revenue streams beyond the oil sector and enhancing long-term fiscal sustainability.
Moreover, the CBUAE’s study highlights the sustained strength of the non-oil private sector, as evidenced by a Purchasing Managers’ Index of 56.6 in January. This reflects continued business confidence and economic dynamism, driven by steady demand and sales.
These positive indicators are expected to fuel ongoing production expansion and investment in new projects, reinforcing the UAE’s economic resilience and diversification efforts.
However, the CBUAE’s optimistic growth forecasts diverge from the more conservative figures projected by the World Bank. The World Bank’s Global Economic Prospects report sets the UAE’s real GDP growth at 3.4 percent for 2023, with gradual increases to 3.7 percent in 2024 and 3.8 percent in 2025.
Looking regionally, the UAE’s economic momentum is mirrored by modest growth forecasts for other Gulf countries, including Saudi Arabia, Kuwait, Bahrain, Qatar, and Oman.
In conclusion, the UAE’s economic trajectory presents a compelling narrative of resilience, dynamism, and growth. As the nation navigates the challenges and opportunities of a rapidly evolving global landscape, the CBUAE’s bullish outlook underscores confidence in the UAE’s economic fundamentals and its role as a beacon of prosperity in the region.
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