The UAE’s GDP grew at a 4.3% clip in 4Q 2023, picking up pace from the 2.5% growth rate in the quarter prior. The growth was buoyed by a rapid growth in the UAE’s non-oil sector — which makes up 75% of total GDP — and “better performance” of the oil sector, the CBUAE said in its latest Quarterly Economic Review report (pdf). Real estate, tourism, and hospitality collectively contributed about 30% of the UAE’s non-oil GDP.

REMEMBER- Non-oil private sector business activity grew at a slower pace in April due to disruptions from that month’s strong storms. The sector sustained its growth on the back of strong business sentiment as companies noted “buoyant market conditions and strong sales pipelines.”

Looking ahead, the CBUAE expects economic growth to decelerate slightly to 3.9% in 2024, a 0.3 percentage point downward revision from its April projection. Sectors such as tourism, transportation, financial and ins. services, and construction will continue to be key drivers of growth. Economic expansion is projected to accelerate to 6.2% clip, supported by robust foreign trade flows sustaining the growth momentum to next year.

ICYMI- The central bank revealed the revised growth projections earlier this month in its 2023 annual report, anticipating growth to “primarily [come] on the back of strong growth in the non-oil sector,” which it expects to grow 5.4%.

Inflation is expected to cool, with the CBUAE now saying it expects the annual inflation rate to settle at 2.3% in 2024, down from the 2.5% annual rate it had previously forecast, attributing the higher rate to “moderate increase in commodity prices, wages and rents.” The central bank foresees inflation persisting at 2.5% y-o-y in 2025, fueled by higher domestic demand and potential depreciation of the AED’s nominal exchange rate.

Speaking of which: The AED’s nominal exchange rate appreciated by 4.2% y-o-y in April 2024 on the back of the USD’s appreciation, compared to a 2.4% y-o-y decrease in March.

IN OTHER ECONOMY NEWS-

Annual inflation in Dubai reached 3.81% in May, according to figures from the DubaiStatistics Center (pdf). This is a modest decline from the 3.91% rate recorded in April.

The culprits: Prices of housing, water, electricity, gas, and other fuels — the largest component of the basket of goods and services — increased at the fastest pace this year to 6.58% in May, compared to 6.46% in April, while food and beverage inflation inched down slightly to 2.28% from 2.29%. Price increases from restaurants and hotels have decreased to 1.27% in May from 2.17% during the previous month.

Month-on-month, Dubai’s inflation decreased to 0.24% in May, down from 0.76% in April, according to the statistics center’s monthly inflation report (pdf).

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