The World Bank on Tuesday increased the UAE’s growth forecast for 2024 and 2025 on the back of a stronger rebound in oil activity and export growth.
According to the World Bank’s latest Global Economic Prospects, the UAE economy is projected to grow 3.7 per cent and 3.8 per cent in 2024 and 2025, respectively. This is 0.3 per cent 0.4 per cent higher than its earlier forecast released in June 2023.
In December, the UAE Central Bank increased the 2024 growth forecast for the country’s economy from 4.3 per cent to 5.7 due to higher oil production.
The global financial institution also raised last year’s growth expectations by 0.6 per cent to 3.4 per cent as compared to its June 2023 forecast.
Following a growth of 7.9 per cent in 2022, the UAE economy took a breather in 2023, but still fared better than most of the regional economies, benefitting from decades of diversification away from oil dependence.
For the Gulf Cooperation Council (GCC) countries, the growth forecast for 2024 and 2025 has been increased by 0.4 per cent and 1.0 per cent to 3.6 per cent and 3.8 per cent, respectively. It said an increase in oil production will help boost growth in the Gulf countries.
“Recoveries in oil production are expected to support the improvement of fiscal balances in several GCC countries, while deficits are projected to widen in some non-GCC oil exporters as expenditures are likely to outpace revenues,” it said.
Meanwhile, the UAE announced in November 2023 that it will implement an additional voluntary cut of 163,000 barrels a day in the first quarter of 2024 in coordination with some Opec+ countries.
The World Bank said growth in GCC is estimated to have decelerated sharply in 2023 because of the decline in oil production, which more than offset robust non-oil activity driven by strong labour markets, moderating inflation, and supportive fiscal policies.
Growth forecast for the Middle East and North Africa (Mena) was also raised by 0.2 per cent and 0.5 per cent to Dh3.5 per cent for both 2024 and 2025, respectively, provided that geopolitical conflict doesn’t escalate. The projection was raised as oil-exporting economies will benefit from the unwinding of oil production cuts.