Emirates NBD has upgraded its growth forecast for the UAE's non-oil sector in 2024 to from 4.5% to 5%, taking headline GDP growth to 3.7% from the previously forecasted 3.3%.

In 2023, The UAE’s economy grew 3.6% based on preliminary data, "in line with our forecast," said Khatija Haque, Head of Research & Chief Economist.

The non-oil sector grew by a faster than expected 6.2% while the oil and gas sector contracted by 3.1%.

"We assume no growth in the oil & gas sector this year as oil production is likely to remain constrained by OPEC+ production limits. If there is an increase in the UAE’s target production level, this would pose an upside risk to our headline GDP growth forecast," she said.

Financial services were the fastest growing sector in 2023, expanding 14.3% year-on-year (YoY) after 6.6% growth in 2022. This was followed by transport and logistics (11.5% YoY), construction and real estate services.

Emirate level data showed that Abu Dhabi’s non-oil GDP grew 9.1% in 2023, only fractionally slower than the 9.2% growth recorded in 2022.

For Dubai, the figures show 3.3% growth in Dubai’s GDP last year (based on only Q1-Q3 data that is available), with transport, logistics and hospitality driving the emirate’s economy in 2023, followed by information & communication (ICT) and real estate services, the report said.

The International Monetary Fund (IMF) said on Monday the UAE was experiencing strong economic growth, with overall real GDP projected to grow by about 4% this year, higher than earlier estimates.

The IMF had projected GDP growth for the Gulf oil exporter at 3.5% in 2024 in its most recent Regional Economic Outlook report, published in April.

(Writing by Brinda Darasha; editing by Seban Scaria)