What’s going to be driving UAE growth next year: The UAE’s GDP growth is projected to double to 4.8% y-o-y in 2024, up from the 2023 forecast of 2.4% y-o-y, according to the latest Economic Insights report from advisory firm Oxford Economics, commissioned by ICAEW. The growth is projected to be mainly driven by the expansion of the non-oil sector, increasing IPO activity, and the various government economic and development initiatives, such as We the UAE 2031.

This is an upgraded forecast from the 4.4% y-o-y GDP growth in 2024 that Oxford Economics projected for the UAE in October.

Non-oil sector expansion to drive growth: While Oxford Economics now expects the non-energy sector’s GDP growth to slow down to 3.8% y-o-y from this year’s recorded 5.9% y-o-y, the modest fall is still expected to lead the economy’s overall growth. Despite the report’s projection being lower, the IMF also expects a positive performance from the UAE’s non-oil sector, anticipating that the non-oil GDP will grow to 4% for the rest of 2023 and to maintain that growth into 2024.

ICYMI: The UAE’s non-oil private sector jumped to a four-year high of 57.7 in October, according to S&P Global’s October purchasing managers’ index (pdf), attesting to the projected upward economic trend. The strong performance was driven by strong demand and a surge in new orders and purchasing activity.

UAE bourses to gain even more traction: IPO activity in the UAE’s stock markets is expected to keep up its momentum on the back of the “diversification efforts coupled with regulatory reforms and technological upgrades” that are set to attract investors to the regional bourses, which in turn will encourage further IPO activity, Oxford Economics said.

The UAE’s stock markets have had a great year: The UAE is going through a privatization drive with seven companies listing their shares on the UAE’s stock markets so far this year, with more set to debut in 2024. Between January and September, the ADX saw an influx of state-owned and private companies listing their shares, with proceeds amounting to USD 3.7 bn, ranking the Abu Dhabi bourse sixth globally in terms of IPO proceeds, according to a report by EY. The UAE generated over 91% of total GCC IPO proceeds in 1Q 2023, according to a report from Kuwait Financial Centre (Markaz).

In war, no economic outlook is certain for the region: In the scenario where the ongoing Israel-Hamas war escalates, the likelihood of which Oxford Economics puts at 10%, the advisory firm sees the GCC growth rate dropping by 1.8%. In that scenario, the war’s disruption of regional and global oil supplies would likely have an adverse impact on inward investment flows and tourism, as well as causing a global economic slowdown.

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