UAE economy poised for 3 percent growth in 2023, accelerating to 4 percent in 2024: S&P Insights

As always, the United Arab Emirates (UAE) has been ahead in its game of economic innovations, future planning and incredible developments.

So it comes as no surprise when we hear that the United Arab Emirates (UAE) is gearing up for a period of robust economic growth. But here’s what’s interesting! With forecasts from S&P, there are indications of a 3% surge in 2023, followed by an even more impressive 4% expansion in 2024.

A question on everyone’s mind is:

What's driving this economic uptick, and what can we expect in the coming years?

S&P analysts highlighted several key factors behind this optimistic outlook.

The UAE government's comprehensive implementation of economic and social initiatives over recent years has played a pivotal role in setting the stage for sustained, long-term economic expansion. These strategic initiatives are designed to diversify the nation's economy away from its heavy reliance on oil.

Tourism: The key growth driver

One of the standout contributors to this growth story is the UAE's robust tourism sector.

With the ability to host major international events, master developments, and record breakers, the country is poised to attract an ambitious 40 million visitors by 2030. To accommodate this influx, multiple plans are already in place to expand the number of hotel rooms to 250,000.

This tourism boom is not limited to a single emirate; both Abu Dhabi and Dubai are actively working to draw business and tourism to the UAE. Additionally, other emirates like Ras Al Khaimah and Sharjah are promoting their unique tourism offerings, increasing diversification within the sector.

Banking and real estate: The future of UAE’s successes

The UAE's banking sector remains strong, with profitability expected to surpass pre-pandemic levels due to rising interest rates.

Technological advancements and strong internal capital generation are contributing to this resilience. Furthermore, the UAE's implementation of the corporate tax system is set to diversify government revenues away from oil, modernising the business environment in the process.

In the real estate sector, Dubai is expected to see greater flexibility with housing prices stabilising amid strong demand. The city's attractiveness for businesses is evident through the rising number of new commercial licences.

The economic vision of the future

A combination of factors is fueling growth in the non-oil sector, including increasing expatriate and tourist inflows and positive sentiment among investors, consumers, and the private sector.

This aligns with the "We Are the Emirates 2031" vision, which aims to boost trade volume and the tourism share of GDP through collaboration between government agencies, institutions, and the private sector.

The UAE's strategic initiatives, such as allowing 100% direct foreign ownership in various activities and introducing new visas like the Golden Residence Visa, are contributing to this economic revitalization.

In addition to these measures, the UAE is developing its yield curve denominated in the local currency, which will enhance local capital markets and expand financing sources for UAE companies and banks.

A promising future for the UAE ahead:

With all these elements at play, the UAE stands as a beacon of economic growth in the region. As the nation forges ahead with its diversification efforts, the future indeed looks promising, setting a solid foundation for continued prosperity and development.

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