The consolidated budget of the UAE will remain in surplus in 2024 at 4.1 percent of GDP after reaching 7.8 percent last year, ratings agency Fitch has said. Abu Dhabi and Dubai will remain in surplus, but deficits will be seen in Ras Al Khaimah and Sharjah. The Emirates’ consolidated surplus will amount to 3.3 percent of GDP in 2025 and 2.6 percent in 2026.
Narrower deficits in Sharjah and higher production levels in Abu Dhabi will mitigate the gradual drop in oil prices from $80 per barrel in 2024 to $70 per barrel in 2025 and $65 per barrel in 2026. The UAE rating was affirmed at “AA-” with a “stable” outlook amid a moderate consolidated public debt level, strong net external asset position and high GDP per capita.
However, these strengths are balanced by weak governance indicators relative to rating peers, high dependence on hydrocarbon income and significant leverage of government-related entities.
Fitch expects the UAE fiscal breakeven oil price will average $64 per barrel from 2024 to 2026. “We expect fiscal policy to remain pro-cyclical, driven by Abu Dhabi, but less so than pre-pandemic and with a greater share of the impulse delivered by state-owned enterprises,” the rating agency said.
Emirates Economy to grow 6.2% in 2025:
UAE’s real GDP will accelerate to 6.2 percent in 2025 from 3.9 percent in 2024 on strong foreign trade performance, the central bank said.
Non-hydrocarbon GDP growth is expected to remain strong at 5.4 percent in 2024 and 5.3 percent in 2025, the apex bank said in its June 2024 economic quarterly review. The hydrocarbon sector is set to grow by 0.3 percent this year and 8.4 percent in 2025.
In the fourth quarter of 2023, the UAE economy expanded 4.3 percent year on year, above the 2.5 percent growth registered in Q3 2023, driven by higher non-hydrocarbon growth and better performance of the hydrocarbon sector.
Fiscal Balance:
The consolidated fiscal balance remained positive at AED85.6 billion ($23.31 billion), or 4.5 percent of GDP, last year, with total revenue declining by 13.9 percent to AED526.1 billion.
Government expenditure increased by 3.1 percent to AED440.5 billion, the central bank said, adding that the fiscal sector will be further strengthened due to the recently introduced corporate tax.
Dubai International Airport received 23 million travelers, up 8.4 percent year on year.
Dubai approved a AED128 billion project for a new passenger terminal at Al Maktoum International Airport in June.
This expansion will increase the size of Dubai’s main international airport fivefold, making it the largest in the world by size and capacity, capable of handling up to 260 million passengers annually.
Meanwhile, Abu Dhabi’s Zayed International Airport welcomed over 6.8 million passengers in the first quarter of 2024, a 36 percent increase year on year.
Source: Arabian Gulf Business Insight
