The UAE is on course for strong growth in Q4, bolstered by government spending and growth in travel and tourism, trade and hospitality, as well as other non-oil sectors.

The Central Bank of the UAE has forecast 3.3% growth for this year and 4.3% for 2024. Earlier this month, the International Monetary Fund predicted the UAE economy would grow by 3.4% in 2023 and 4.0% next year.

According to head of research and chief economist at Emirates NBD Research, Khatija Haque, hotel indicators reveal a complete recovery from the pandemic, with occupancy rates and revenue per room far surpassing pre-Covid levels.

“The outlook for the coming high season is also positive, with many hotels reporting full occupancy through Q4 2023, on the back of the COP28 event to be held in Dubai, and strong bookings for the first couple of months in 2024,” Haque stated.

Furthermore, the UAE’s non-oil sector has been a strong point during 2023, says the economist for the Mena region at Capital Economics, James Swanston. Indeed, the UAE’s non-oil foreign trade reached Dh1.239 trillion during the first six months of the year, a 14.4% growth compared to the same time last year, the Khaleej Times reports.

In addition, Dubai's GDP for Q2 also revealed further growth. Real GDP growth of 3.2% was recorded in the first half of the year, whilst Q2 growth reached 3.6% year-on-year from the 2.8% growth reading in Q1.

Haque added that up to now, higher interest rates haven’t significantly inhibited the UAE’s non-oil growth. That said, there are variable lags in terms of the effect of higher interest rates on the real economy.

“With interest rates now expected to remain higher for longer into 2024 – given the apparent resilience of the US economy to tighter monetary policy – uncertainty around the outlook for 2024 remains high. Higher borrowing costs are likely to weigh on private sector consumption and investment, and a strong US Dollar makes the region a more expensive destination for visitors from emerging markets,” Haque said.