FAB report says UAE’s GDP is likely to expand by 3.7 percent in 2023 and 4 percent in 2024
The economies of the UAE and Gulf countries are expected to outpace the global forecast for 2024. The surge in economic growth is driven by a domestic multi-year investment cycle. Increasing demand in key sectors such as tourism, real estate, transportation, and manufacturing are also major drivers for the growth of Guld economies. In its most recent Global Investment Outlook (GIO) 2024 report, First Abu Dhabi Bank (FAB) paints an optimistic picture for the region’s economy.
The GIO report delves into the global economic landscape, offering insights into key macroeconomic trends. It underscores the Gulf region’s resilience, emphasizing the sustained growth in non-oil sectors as countries continue their diversification efforts.
Strong growth projections
FAB anticipates the UAE’s GDP to expand by 3.7 percent in 2023 and 4 percent in 2024. Moreover, it expects the broader Gulf region to grow by 3.4 percent in the medium term, surpassing the IMF’s global forecasts of 3.1 percent and 2.1 percent for the United States in 2024. The robust non-oil GDP expansion and ongoing economic diversification efforts are the main drivers for the growth momentum across the Gulf economies.
Navigating market volatility
Against the backdrop of ongoing economic and market volatility, FAB advises investors to diversify the asset allocation in their portfolios. Moreover, it advises investors to build defensive portfolios for flexibility. The report highlights supportive factors such as higher fiscal spending, rapid disinflation, and a tight labor market. These factors support consumption and spending and lift global equity markets. However, FAB warns of the potential impacts of monetary policy decisions on interest rates and inflation.
Michel Longhini, group head of FAB Global Private Banking, highlights the importance of cautious investment amid rising interest rates and geopolitical uncertainties. “Global economic growth is expected to slow down in 2024. However, our regional markets look resilient, with economic growth expected to pick up, driven by successful economic diversification and reforms,” he added.
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Key trends and risks
In addition to economic indicators, the GIO report sheds light on various trends shaping future growth prospects for Gulf economies. This includes environmental, social, and governance integration, oil markets, MENA market outlook, emerging markets, and real estate. Additionally, FAB identifies five key risks for 2024. This includes artificial intelligence, U.S. elections, regional tensions, climate change, and US-China relations.
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