- Scott Livermore projects the UAE economy will grow by 4.8 percent in 2025, driven largely by the non-oil sector.
- The non-oil economy, particularly travel and tourism, is expected to grow by 4.6 percent in 2024, with visitor numbers to Dubai seeing over 20 percent growth this year.
- The UAE’s investment activity is anticipated to remain strong, supported by initiatives like ‘We the UAE 2031’ and D33 in Dubai.
- Livermore expects the US Federal Reserve to begin cutting interest rates by 50 bps by the end of 2024 and by 150 bps by the end of 2025.
Scott Livermore, ICAEW Economic Advisor and Chief Economist at Oxford Economics Middle East, has projected a positive outlook for the UAE economy in the coming years. According to Livermore, the UAE is expected to see economic growth of 4.8 percent by 2025, driven by a strong non-oil sector and significant government initiatives.
Livermore explained that the non-oil economy in the UAE is projected to grow by 4.6 percent year-on-year in 2024. Key sectors such as travel and tourism play a vital role in this expansion, with Dubai’s tourism industry setting new records.
Visitor numbers to Dubai, as well as traffic through Dubai International Airport (DXB), are expected to grow by over 20 percent this year. This strong upward trend is anticipated to continue, with double-digit growth expected in the following year as well.
Navigating Economic Challenges
Despite facing challenges, particularly due to higher interest rates, the UAE has successfully navigated these obstacles, thanks to robust government support.
Livermore highlighted the UAE’s growth and diversification strategies, which have helped maintain economic stability and growth despite global economic headwinds. These plans, such as “We the UAE 2031” and Dubai’s D33 strategy, are expected to fuel investment activities across the country.
Enhancing Investment and Foreign Attractiveness
The UAE’s efforts to attract foreign investment and talent are paying off. Livermore emphasized that policies such as 100 percent foreign ownership of onshore companies and reduced costs for business establishments have made the UAE more attractive to foreign investors.
These reforms have not only driven population growth but have also significantly boosted the real estate market, further contributing to the overall economic landscape.
The UAE’s economic strategy goes beyond traditional sectors, as policymakers are placing a strong emphasis on emerging industries. Livermore pointed out that areas like finance, creative industries, and manufacturing are becoming key pillars in the UAE’s economic development. These innovative sectors are expected to drive future growth and further diversify the country’s economic base.
Impact of US Federal Reserve Interest Rates
Regarding global monetary policy, Livermore also commented on the potential direction of US Federal Reserve interest rates. He predicted that the Fed would shift its focus from inflation to the labour market, expecting an interest rate cut by September.
Livermore believes the Fed is no longer solely concerned with inflation, noting that labour market risks have become a priority. He anticipates the Fed will cut rates by 50 bps by the end of 2024 and by 150 bps by the end of 2025. However, he acknowledged that these cuts could be more substantial if the labour market deteriorates faster than expected.
Global Economic Outlook
Livermore also offered his perspective on the global economy, forecasting a 2.7 percent growth rate for this year and the next. He downplayed concerns about the possibility of the US slipping into a recession, stating that recent data suggests a more controlled and manageable slowdown in growth, rather than a severe downturn.
Looking Ahead
The UAE’s economy is poised for strong growth in the coming years, particularly in its non-oil sectors like travel, tourism, and emerging industries. Government strategies and reforms are playing a crucial role in attracting foreign investment and ensuring long-term stability.
Meanwhile, the global economic outlook remains steady, with the US expected to avoid recession. As the UAE continues to implement its forward-looking plans, it stands as a robust and resilient player in the global economic landscape.
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Last Updated on September 21, 2024 by Safiya K
