We have a trifecta of economic growth forecasts out this morning, with the release of the World Bank’s traditional MENA Economic Update coinciding with the Economy Ministry’s latest annual economic report, as well as fresh projections from Oxford Economics.

Who’s saying what: The country’s GDP is expected to grow at a 3.9% clip in 2024, according to the economy ministry’s latest economic annual report (pdf). That’s up 0.4 percentage points from the ministry’s previous forecast, which had penciled in 3.5% growth in 2024. The World Bank is on the same page, saying in its latest MENA Economic Update report (pdf) that it also expects GDP growth to hit 3.9% this year. Oxford Economics, meanwhile, has revised its projections for the UAE’s growth down 0.4 percentage points to 4.4%, down from the 4.8% the advisory firm previously projected in December, Scott Livermore, chief economist at Oxford Economics Middle East, told Wam.

There’s consensus that growth will pick up even more next year — although there’s no consensus on exact figures: The World Bank expects economic growth to accelerate to 4.1% in 2025, while Oxford Economics is more optimistic, saying the domestic economy could grow 5.6% next year, Livermore said.

REMEMBER- The Central Bank of the UAE said earlier this month it expects the economy will grow at a 4.2% clip in 2024, marking a downward revision of 1.5 percentage points from its December projection. The CBUAE sees growth accelerating to 5.2% in 2025, supported by steady growth in the non-oil economy and stable oil production levels towards the end of 2024.

Non-oil economy to keep the momentum going: The country’s non-oil GDP growth is expected to come in at 4.3% in 2024, building on the continued (albeit slower) growth in 2023, according to Livermore. This is an upwards revision from the 3.8% Oxford Economics had previously penciled in, following the government’s successful economic diversification efforts particularly the growing tourism sector, which is considered “a main growth driver” and a key focus on the UAE’s growth agenda, according to the firm’s general manager.

ICYMI- Tourism is a big focal point: The tourism sector's contribution to Dubai’s GDP is expected to have doubled to 36.1% in 2023, reaching pre-pandemic levels, according to property consultant Cavendish Maxwell, which attributes growth to initiatives to boost the tourism sector, with the national tourism strategy pegged to increase GDP contribution to AED 450 bn and attract investments worth AED 100 bn by 2031.

Abu Dhabi’s Department of Culture and Tourism is also planning to spend USD 10 bn on infrastructure as part of the emirate’s new tourism strategy. The Abu Dhabi Executive Council approved the emirate’s tourism strategy for 2030, aiming to almost double the number of visitors to 39.3 mn and boost the sector’s contribution to non-oil GDP to AED 90 bn per year by the end of the decade.

INFLATION-

Inflation on track to cool: Inflation is expected to decelerate to 2% from 3.4% in 2023 on the back of lower energy and food prices globally, according to the ministry’s report. This would be 2.8 percentage points below the 4.8% peak of in 2022.

The CBUAE has a different view, having revised its inflation projection for 2024 earlier to 2.5%, an increase from the previously projected 2.1%. The ministry adjusted its projection on the back of inflationary pressures including higher oil, wheat, and corn commodity prices as well as the impending depreciation of the USD as rate cuts loom. The bank expects inflation to remain unchanged at 2.5% in 2025.

DEBT-

The government’s debt bill is projected to continue declining, with the state’s debt-to-GDP ratio expected to come in at 29.4% in 2024, down from 30.5% of GDP in 2023, the ministry said. The World Bank estimates the 2023 debt-to-GDP ratio stood at 29.2%, with a 5.8% primary balance.

THE BIGGER PICTURE-

In the region: The World Bank expects to see 2.8% growth in the GCC this year and 4.7% in 2025, the report reads. This is attributed to the expected phasing out of voluntary oil production cuts. It’s also expecting a 2.7% growth for the MENA region this year and 4.2% in 2025, matching pre-pandemic levels. That’s more or less on par with Oxford Economics, which expects to see 2.7% average GDP growth across the GCC.

The worst is over for the global economy: Expecting global economy to grow by 2.4% this year and by 2.8% in 2025, Livermore said that the “worst point for global growth has passed, as the activity data from the United States, China, and the Eurozone has been reassuring lately, and we expect activity to improve in most countries in the future.”

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