UAE remains GCC’s strongest economic performer despite minor hiccups

The UAE is expected to remain the Gulf’s strongest economic performer in 2024-2025 despite seeing a reduced pace at the beginning of the year. A robust non-oil sector should help the GCC star economy retain its coveted position.

Earlier this year, the Central Bank of UAE projected strong performance of 4.2% for 2024 and an even higher rate of 5.2% for 2025, mainly supported by non-oil GDP. The IMF also projected about 4% GDP rise in May, revising up from 3.5% forecast in the month before.

UAE to remain Gulf’s star economy despite fall in numbers

Recently released first-quarter 2024 Gross Domestic Product (GDP) data from Dubai and the capital Abu Dhabi represented a slightly softer start to the year. Dubai’s economic performance noted a drop to 3.2% year-on-year in Q1 of this year.

The capital emirate’s numbers also dropped – from 4.1% YOY in Q4 2023 to 3.3% YOY in Q1 2024. Performance in both the oil and non-oil sectors fell. Given that these are the largest emirates, it is fair to say that performance dropped at the national level too.

The economist for Mena region at Capital Economics said they expect the UAE’s GDP to rise by 3.3% this year as activity in the private non-oil economy softens and oil output remains constrained. But these forecasts still help the UAE remain the Gulf’s star economy.

Gulf economies to see better performance in coming quarters

In the last OPEC+ meeting, the group agreed to leave oil output virtually unchanged until October and to gradually loosen voluntary output cuts thereafter. Gulf economies are likely to see better performance in the coming quarters as oil output starts to rise.

“The recent fall in oil prices raises the risk that planned output rises are delayed,” said the Capital Economics economist, but added that the oil sector is likely to provide a significant support to the UAE economy and help the oil GDP rise over the coming quarters.