RIYADH: The UAE’s gross domestic product is anticipated to exceed 5 percent this year, surpassing global economic projections, a leading rating agency said.
Speaking to the Emirates News Agency, also known as WAM, Tatiana Leskova, associate director of corporate ratings at S&P Global, said the growth in the UAE’s gross domestic product, particularly in Dubai, will be driven by strong momentum in the hospitality, wholesale and retail, and financial services sectors.
S&P Global had previously predicted that the global GDP is projected to expand by 2.8 percent in 2024.
Leskova further noted that UAE’s GDP expanded by over 3 percent in 2023, at a time when the global economy showed minimal growth.
“While the global economy remained subdued operating at subpar growth levels, we estimate that the UAE’s GDP expanded at over 3 percent in 2023, including close to 6 percent growth for the non-oil sector,” she said.
Leskova added: “In Dubai, we expect continued strong momentum in the hospitality, wholesale and retail, and financial services sectors to drive growth in 2024-2025.”
Talking about the real estate sector in the UAE, she said that the country, and more specifically Dubai, have been immune to global economic headwinds thanks to the limited sensitivity to interest rates and contained inflation.
“Despite higher interest rates, the number of mortgage transactions continued to grow in Dubai, where over 80 percent of real estate transactions are completed on a cash basis. In contrast, the European real estate market has been marked by weakened purchasing power since 2022 due to high-interest rates and relatively higher inflation,” Leskova explained.
According to her, since 2022, there has been a shift in the type of investors entering the Dubai real estate market, as more Russian buyers started entering the emirate.
“The profile of buyers evolved slightly since 2022, with a sharp increase in Russian buyers becoming one of the largest investor groups in Dubai. We expect this to be temporary, with Indians, Europeans and GCC buyers remaining the largest investors as per the historic trend,” Leskova concluded.
Amid global economic headwinds, the UAE has been witnessing strong growth in its non-oil sector, aligned with the Emirates’ economic diversification efforts.
According to S&P Global’s latest PMI report released this month, the UAE’s PMI reached 57.4 in December 2023, compared to 57 in November.
Any PMI reading above 50 indicates growth in the non-oil sector, while readings below 50 signal contraction.