CBUAE revises upwards its GDP growth projection for 2024 to 4 per cent; 6 per cent for 2025
The 16 non-oil sectors continued their robust growth pattern in Q2 2024
Abu Dhabi: The Central Bank of the UAE (CBUAE) revised upwards its GDP growth projection for 2024 to 4 per cent from 3.9 per cent previously, reflecting the improved performance of the oil sector.
For 2025, growth is expected to increase to 6 per cent, 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 per cent in 2024 and 5.3 per cent 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 per cent ownership of foreign businesses, tax reforms, etc.
The hydrocarbon sector is expected to grow by 0.7 per cent in 2024, followed by further expansion by 7.7 per cent in 2025
The fiscal balance for the first quarter of 2024 remained positive at Dh23.5 billion, representing 4.9 per cent of GDP, compared to Dh23.2 billion or 5.1 per cent of GDP in the first quarter of 2023.
Consolidated budget revenue in January-March 2024 increased by 4.3 per cent Y-o-Y, reaching Dh120.6 billion, or 24.9 per cent of GDP. This growth was primarily driven by a significant 32.5 per cent 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 per cent in Q1 2022 to nearly 70 per cent in Q1 2024. This shift is largely attributable to the recently introduced corporate tax.
Government expenditure in the first quarter of 2024 totaled Dh97.1 billion, or 20 per cent of GDP, reflecting a 5 per cent year-on-year increase. Major expenditure categories, including compensation of employees (Dh30.3 billion), use of goods and services (Dh25.9 billion), and social benefits (Dh16.8 billion), rose by 6.3 per cent, 15.2 per cent, and 3.4 per cent year-on-year, respectively. Additionally, capital expenditure saw a significant increase, more than sevenfold, reaching Dh5.6 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 per cent 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.