The emirate of Sharjah is set to experience steady economic growth over the next three years, driven by a strong private sector. S&P Global Ratings predicts that the real GDP growth in Sharjah will average 2.8 per cent from 2024 to 2027, with the economy expanding by 4.6 per cent in 2023. Key sectors such as manufacturing, construction, transport, and trade will serve as the main drivers of growth during this period.
The agency projects a gradual increase in GDP growth over the next four years, with growth rates of 2.5 per cent, 2.7 per cent, 3.0 per cent, and 3.0 per cent expected in 2024, 2025, 2026, and 2027, respectively. This growth will be fueled by continued activity in the aforementioned sectors, as well as sustained demand for real estate in Sharjah. The emirate’s economy is relatively diverse and not heavily reliant on hydrocarbon exports, with GDP per capita expected to rise to $22,000 in 2024 from $19,000 in 2020.
Sharjah’s population has been steadily increasing, reaching 1.8 million in the 2022 census, a 30 per cent rise from the 1.4 million recorded in 2015. This population growth is expected to further boost the emirate’s productive capacity and economic growth. S&P analysts predict that Sharjah’s GDP per capita income will reach $25,000 by 2027, reflecting the positive impact of demographic trends on the economy.
Despite the positive outlook for economic growth, S&P analysts anticipate a slight narrowing of the government deficit to 5.7 per cent in 2024. This reduction is expected to be driven by decreased government expenditure, offsetting a modest weakening in revenue as a share of GDP. Revenue-raising measures are expected to aid Sharjah’s fiscal consolidation efforts, including new fees on real estate transactions for foreign buyers, expansion of car license plate auctions, and the implementation of a 9 per cent corporate tax on business profits above Dh375,000.
In 2023, Sharjah’s fiscal deficit exceeded the target due to higher capital spending, debt-service costs, and increased expenditure in various departments. Revenue, however, exceeded expectations, supported by windfall land sales, higher revenue collection from economic development and police departments, and larger transfers from government-related entities. Revenue growth is expected to moderate in the coming years, but the implementation of revenue-raising measures should help bolster the emirate’s fiscal position.
In conclusion, Sharjah’s economy is poised for continued growth driven by a robust private sector and key sectors such as manufacturing, construction, transport, and trade. Population growth and diversification of the economy away from hydrocarbon exports are expected to support this growth trajectory. While fiscal challenges exist, revenue-raising measures and fiscal consolidation efforts are in place to address them and ensure sustained economic stability in Sharjah.
