The Central Bank of the UAE predicts a robust foreign trade performance for the country in 2024 and 2025, supporting a projected GDP growth of 3.9 percent in 2024 and 6.2 percent in 2025. The bank revised its inflation forecast for 2024 to 2.3 percent, down from the previous estimate of 2.5 percent. Non-hydrocarbon GDP growth is expected to remain strong at 5.4 percent in 2024 and 5.3 percent in 2025, with the hydrocarbon sector also showing growth in 2025.
In the fourth quarter of 2023, the UAE economy expanded by 4.3 percent year on year, driven by both non-hydrocarbon growth and better performance of the hydrocarbon sector. The country’s non-oil trade reached a record high in 2023, reflecting efforts to reduce reliance on oil. Trade in non-oil goods rose by 12.6 percent from the previous year, with exports surpassing one trillion dirhams. The Comprehensive Economic Partnership Agreements signed by the UAE are expected to boost foreign trade numbers moving forward.
The International Monetary Fund (IMF) has projected higher growth for the UAE economy in 2025, with a GDP growth forecast of 4.2 percent as opposed to 3.5 percent in 2024. The World Bank has also raised its forecast for the UAE’s economic growth to 4.1 percent in 2025, showing positive indicators for the country’s economic outlook. The country is expected to achieve a surplus in its fiscal balance and maintain a positive current account surplus.
The CBUAE’s latest data shows positive fiscal balance in 2023, with total revenue declining and government expenditure increasing. Economic indicators show robust activity in the non-oil private sectors, with the Purchasing Managers’ Index (PMI) for the UAE remaining strong. The PMI for Dubai specifically reflects continued growth in the emirate’s non-oil private sector. The downward revision of inflation can be attributed to lower-than-expected increases in commodity costs, incomes, and rents.
Looking ahead, inflation is forecasted to average 2.3 percent in the following year, driven mainly by the non-tradeable component of the consumer basket. The overall economic outlook for the UAE remains positive, with strong foreign trade performance, GDP growth, and fiscal strength. Continued efforts to diversify the economy away from oil dependence and ongoing initiatives to boost non-oil sectors are expected to drive further growth in the coming years.
