CBUAE brings down GDP growth outlook to 1.6%

The Central Bank of the UAE (CBUAE) has shaved another 0.1% off its real GDP growth outlook for this year, after its July prediction of 1.7% marked a sharp drop from its April forecast of 5.6%. Now, the central bank sees real GDP growth coming in at 1.6% this year, it said in its quarterly report (pdf).

According to the CBUAE, state measures are driving a large part of the growth. It cites its own resilience package to help insulate lenders from the effects of the war, alongside AED 2.5 bn in support rolled out by Dubai authorities to shield more exposed sectors, as underpinning the growth outlook for the Emirates. Importantly, the central bank’s measure will be wearing off soon, with analysts telling us the main risk sits in the medium term for now, especially for firms reliant on global supply chains.

However, 2027 is looking up: The CBUAE sees GDP growth jumping to 10.4% in 2027, up from its previous prediction of 9.8% in July, supported by a solid macro backdrop and fiscal and policy buffers.

On the inflation front, the central bank is pencilling in 2.4% for this year, before slowing to 1.9% next year, with a cooler housing market and stable food prices set to hold price growth rates below the global average.

In perspective: Despite the revised figures, the central bank’s predictions are still markedly more optimistic than others. Oxford Economics is expecting a GDP contraction of 0.2%, down 4.6% from its pre-war estimates, while Goldman Sachs sees GDP shrinking by around 5%.