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UAE Cuts Economic Growth Forecast Amid OPEC+ Oil Output Cap - BLOOMBERG
BY , Bloomberg News
, Source: UAE Central Bank
(Bloomberg) -- The United Arab Emirates revised down its economic growth projection this year on the back of lower oil production under its OPEC+ quota.
Gross domestic product is now seen at 4.2% in 2024, according to the central bank’s quarterly economic review, down from an earlier estimate of 5.7% in December. This is mainly due to “a slower recovery in oil production in light of the OPEC+ agreement in November 2023, and a robust yet declining growth in the non-oil sector,” according to the report.
The central bank sees oil-sector growth at just under 3%, much lower than the 8.1% expected previously and corresponding to an average oil production of 3 million barrels per day. Non-oil GDP is estimated at 4.7%, in line with previous projections.
The forecast potentially gives the UAE an argument to contest its OPEC+ output limits when the group meets next in June. The nation is able to produce significantly more crude oil than the quota permits and has shown it’s eager to deploy newly installed capacity. It has in the past clashed with neighboring Saudi Arabia over the right to use it.
Read: OPEC+ Cuts Succeed as Oil Price Recovers in Tighter Market
The lower forecast is “solely a function of lower anticipated oil production in 2024,” according to Carla Slim, an economist at Standard Chartered Plc which is a “sizable growth downgrade as the central bank has shaved 1.5% off of its 2024 growth estimate.”
Still, “non-oil growth projections have been kept stable at 4.7%, marking little expectations of a slowdown in non-oil sectors,” she said.
Read More: UAE Bucks Global Slump as Non-Oil Trade Nears $1 Trillion
The UAE’s economy is arguably the most diversified among Gulf neighbors, with its oil-rich capital Abu Dhabi recently developing into a haven for international money, attracting family offices or outposts for investors such Bridgewater Associates founder Ray Dalio and Egyptian billionaire Nassef Sawiris. Still, the Gulf nation still heavily relies on oil production and prices to sustain growth.
--With assistance from Grant Smith.
