In a significant update, the Central Bank of the United Arab Emirates (CBUAE) has enhanced its economic growth forecast for the year 2024, adjusting it upward from 4.3% to 5.7%. This optimistic revision aligns with the Organization of the Petroleum Exporting Countries and allies (OPEC+) decision to boost oil production in the coming year.
A Closer Look at the Revised Projections
Despite this optimistic outlook for 2024, the CBUAE has tempered expectations for 2023, revising its growth forecast down from 3.3% to 3.1%. This adjustment reflects the ongoing oil production cuts which are anticipated to continue until the end of 2023.
Oil Sector Dynamics
OPEC+, in early December, resolved to implement voluntary output reductions amounting to approximately 2.2 million barrels per day (bpd) for the first quarter of 2024. The UAE is set to contribute to this initiative by reducing its output by 163,000 bpd from January to March.
The CBUAE projects a contraction in the oil GDP of 3.4% for 2023, attributable to these sustained production cuts. However, a rebound is anticipated in 2024, with a projected growth rate of 8.1%, as oil production ramps up in accordance with the latest OPEC+ agreement.
Non-Oil Sector: A Diverse Growth Engine
The non-oil sector of the UAE’s economy is also expected to experience notable growth. The CBUAE has forecasted growth rates of 5.9% for 2023 and 4.7% for 2024 in this sector. This growth is driven by expansion in key industries such as financial and insurance services, construction, real estate, and wholesale and retail trade.
Global Influences and Uncertainties
The CBUAE’s report acknowledges several global factors that could impact these forecasts. These include the ongoing conflicts in Ukraine and Gaza, potential fluctuations in global growth rates, further OPEC+ decisions regarding oil production, and the performance of other OPEC+ member countries.
Detailed Tables and Comparative Analysis
The report includes comprehensive tables detailing the economic projections, sector-wise growth rates, and comparative analyses with previous years. These tables offer a nuanced understanding of the UAE’s economic trajectory.
Conclusion
In conclusion, while the UAE’s economic forecast for 2024 shows promise, particularly in light of increased oil production, the outlook remains cautiously optimistic, given the various global and regional uncertainties. The non-oil sector continues to be a vital component of the UAE’s economic resilience and diversification strategy.
