The United Arab Emirates’ (UAE) economy experienced a notable 4.3 per cent year-on-year growth in the fourth quarter of 2023, according to preliminary government data. This impressive performance was largely driven by the non-oil sector, which surged by 6.7 per cent during the same period, as reported by the Federal Competitiveness and Statistics Centre.
Non-Oil GDP: A Beacon of Economic Diversification
Among the standout sectors contributing to this robust non-oil GDP growth were financial and insurance activities, transportation and storage, real estate, and construction. The UAE has also intensified its investments in renewable energy and advanced technology, further underscoring its commitment to economic diversification.
As one of the world’s leading oil exporters, the UAE has been accelerating its efforts to diversify its economy away from hydrocarbons. This strategic shift aims to attract foreign investment and reduce dependency on oil revenues. Currently, non-oil GDP accounts for over 70 per cent of the UAE’s overall growth contribution.
Despite a decline in oil activity last year due to lower production and prices, which affected all regional oil and gas producers, the UAE’s real GDP growth is estimated at 3.6 per cent for 2023. Non-oil GDP growth is projected at a robust 6.2 per cent, highlighting the resilience and dynamism of the UAE’s diversified economy.
The International Monetary Fund (IMF) recently acknowledged the broad-based nature of economic growth in the UAE, driven by solid domestic activity in sectors such as tourism, construction, and financial services. Reflecting this optimism, the IMF has revised its preliminary forecast for GDP growth in 2024 to 4 per cent, up from the 3.5 per cent projected in its last Regional Economic Outlook report published in April.
A Reuters poll of economists conducted in April also forecasted the UAE’s GDP growth at 4 per cent in 2024, positioning it as the fastest-growing economy among its Gulf peers. “The UAE’s economy has been remarkably resilient to both a lacklustre external backdrop as well as significantly higher interest rates in 2023,” noted analysts from Emirates NBD in a recent research note.
