The UAE’s non-oil sector is projected to maintain the fastest growth rate among GCC countries this year, expected to reach about 5%. A report by Emirates NBD suggests that lower interest rates in the last quarter of the year and into 2025 will bolster both consumption and investment in the region.

Last year, the UAE achieved the highest growth rate in the Gulf’s non-oil sectors, with a 6.2% increase, continuing to expand in the first half of this year, according to the Purchasing Managers Index. Khadija Haqqi, Chief Economist and Head of Economic Research at Emirates NBD, highlighted that the UAE is set for strong growth in non-oil sectors. The average growth in non-oil GDP across GCC countries was about 4.2% last year, down from 5.5% in 2022.

Private sector consumption is the main driver of the UAE’s economy in 2023, supported by public sector spending and investments. A 12% growth in real private sector consumption is partly due to population growth and new families. However, Emirates NBD expects private consumption growth to stabilise this year as consumers face rising living costs, particularly in housing, and increased loan interest rates.

Public and private sector investments are expected to significantly drive non-oil sector growth in 2024 and beyond. Infrastructure investments, both ongoing and planned, increased in the first half of this year. Investments in private sector projects under construction rose from Dh235 billion at the start of the year to Dh315 billion by the end of June, mainly in construction. Public sector project investments also grew by about Dh70 billion, reaching nearly Dh334 billion by June’s end, with oil, gas, and construction projects being the most significant.

The UAE has maintained its investment attractiveness, becoming the largest recipient of foreign direct investment in the region, which rose by 35% to nearly Dh31 billion in 2023, despite a decline in global flows, according to the United Nations Conference on Trade and Development.

ALETIHAD