The Central Bank of the UAE (CBUAE) has revised the country's 2024 growth projection from 4.3% to 5.7% as OPEC+ announced significant increases in oil production next year, the apex bank said in its latest Quarterly Economic Review report.  

However, the CBUAE has revised its growth projections for 2023 from 3.3% to 3.1%, largely reflecting the extension of oil production cuts through the end of the year.

In the first week of December, OPEC+ oil producers agreed to voluntary output cuts totalling about 2.2 million barrels per day (bpd) for the first quarter of 2024, led by Saudi Arabia rolling over its current voluntary cut.

The UAE also agreed to lower output by 163,000 bpd next year, from January until the end of March.

According to the CBUAE, oil GDP is expected to contract in 2023 by 3.4% in 2022, as production cuts are forecast to be in place until the end of 2023. The oil GDP growth will likely rebound to 8.1% in 2024, as production resumes in 2024 based on the latest OPEC+ agreement.

Non-oil economy

The central bank has revised the expected growth rate in the UAE non-oil economy for 2023 and 2024 to 5.9% and 4.7%, respectively, owing to an expansion in segments such as financial and insurance services, construction, real estate, wholesale and retail.

"In addition to the changes in oil production reflecting the recent announcements, the forecasts account for a deceleration in the non-oil sector for 2023 and 2024 as global demand softens," the report stated. 

"The forecasts for 2023 and 2024 remain subject to uncertainty, in particular due to the evolution of the conflicts in Ukraine and Gaza, faster than expected deceleration in global growth, further OPEC+ cuts or increases in oil production, and subdued oil production of other OPEC+ members," it said.

(Reporting by Seban Scaria; editing by Daniel Luiz)
(seban.scaria@lseg.com)