Non-oil sector to drive growth in UAE and GCC in 2024
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Government spending growth likely to be more modest in 2024
The non-oil sector will drive growth in the UAE and the GCC region in 2024 as crude oil demand is expected to remain subdued due to low demand, economists say.
Khatija Haque, Chief Economist and Head of Research at Emirates NBD, said non-oil sector growth was 5.9 per cent for the entire UAE in the first half of 2023, driven by 9.2 per cent growth in Abu Dhabi’s non-oil sectors compared to growth of 3.2 percent in the first half of Dubai. Preliminary data for the third quarter showed non-oil growth in Abu Dhabi slowed only slightly to 7.7 percent.
“In 2024, we expect non-oil growth to slow only slightly to 4.5 percent due to slower global growth. Continued structural reform to improve the business environment and attract investment is expected to shore up aggregate demand, although at a slower pace than in 2023.”
she said.
Haque It sees global growth slowing slightly to 2.9 percent in 2024 from 3.0 percent in 2023, as tight monetary policy continues to weigh on demand and investment, particularly in the first half of the year.
“This scenario is consistent with weaker oil demand, particularly in advanced economies, and oil GDP growth in the GCC will continue to be a drag on overall GDP growth in 2024. We expect oil prices to average 82, $5 per barrel this year, similar to 2023.”
saying Haque.
On Wednesday, world Bank It also projected slower growth for the third straight year in 2024, from 2.6 percent last year to 2.4 percent, as rising geopolitical tensions could create new near-term dangers for the economy.
“However, we believe non-oil growth will remain relatively strong, averaging 3.6 percent across the GCC in 2024, supported by continued investment as oil-exporting countries press ahead with ambitious economic diversification”.
Haque he said in a note.
She believes that public spending growth will likely be more modest in 2024 than in recent years.
“We do not expect governments to reduce spending or tighten fiscal policy through higher taxes,”
she added.
Among non-oil sectors, travel and tourism, real estate, aviation and trade have seen exponential growth in the post-pandemic period as economies recovered after a massive contraction in 2020.
News Source: Khaleej Times
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