UAE Economy Set to Soar: 3% Growth in 2023, 4% in 2024

UAE Economy Set to Soar: 3% Growth in 2023, 4% in 2024

The United Arab Emirates (UAE) is gearing up for an economic surge, with forecasts like S&P predicting a robust 3% growth in 2023, followed by an even more impressive 4% growth in 2024. This upward trajectory is primarily attributed to the non-oil sector, which stands to gain significantly from a potent blend of factors, including a burgeoning tourism industry, forward-thinking government initiatives, and technological advancements.

Diverse Growth Drivers

The UAE government’s comprehensive implementation of economic and social initiatives in recent years emphasizes its pivotal role in propelling the economy forward. These initiatives encompass a wide array of sectors, from tourism to financial services, and have fostered an environment conducive to growth.

Tourism’s Ascendancy

One of the standout contributors to the UAE’s economic expansion is its vibrant tourism sector. The nation’s ability to host major international events is expected to be pivotal in attracting 40 million visitors by 2030. Accompanying this objective is a plan to expand the number of hotel rooms to an impressive 250,000 during the same period. These ambitious targets underscore the UAE’s unwavering commitment to becoming a global tourism hub.

The emirate of Dubai’s remarkable achievement in attracting 14.7 million international visitors in 2022, double the 2021 figures, is a testament to its allure. The emirate of Abu Dhabi also experienced a 24% increase in hotel guests in 2022 compared to 2021, solidifying its status as a burgeoning tourism destination.

Experts anticipate that the UAE’s tourism sector will continue to flourish, especially with the regular hosting of prominent events like the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28). With Abu Dhabi and Dubai leading the way in attracting businesses and tourists and other emirates like Ras Al Khaimah and Sharjah actively promoting their tourism sectors, the country is poised to offer an increasingly diverse array of tourism experiences.

Banking Sector Resilience

The UAE’s banking sector is poised to remain robust, with profitability expected to surpass pre-pandemic levels, thanks in part to rising interest rates. This resurgence is further supported by the government’s emphasis on technological advancements, which have ushered in a new era of efficiency and innovation in the financial services industry.

Real Estate Flexibility

The Dubai real estate sector is also set to become more flexible, with housing prices remaining stable and strong demand underpinning its growth. This stability is a boon for investors and homeowners alike, providing a solid foundation for economic development. This development is also a huge opportunity to invest in the UAE real estate market, even for individuals, setup a local holding structure to tax optimize income generated through real estate properties.

Key Contributors to Growth

Several sectors are key contributors to the country’s economic growth. These include oil and gas, wholesale trade, industry, real estate, construction, financial services, and tourism. The non-oil economy will be bolstered by inflows of expatriates and tourists and positive sentiment from investors, consumers, and the private sector.

We Are the Emirates 2031 Vision

Furthermore, the “We Are the Emirates 2031” vision has driven economic growth. This ambitious initiative aims to increase trade volume and the tourism share of GDP through close cooperation between government agencies, institutions, and the private sector.

Long-Term Economic Growth

The UAE government has implemented a wide range of commercial and social initiatives over the past few years. These include allowing 100% direct foreign ownership in over 1,000 commercial and industrial activities, introducing insolvency laws to help individuals facing financial difficulties, and enhancing the UAE’s competitiveness in terms of ease of doing business. New visa categories, such as the Golden Residence Visa, the Green Residence Visa, and multiple-entry tourist visas, have been introduced to attract skilled workers and tourists to the UAE.

Strengthening Local Capital Markets

The UAE’s recent efforts to develop the yield curve denominated in the UAE dirham through treasury bonds and local currency-denominated instruments are expected to enhance local capital markets. This expansion will provide more sources of financing for UAE companies and banks.

Diversifying Government Revenues – Corporate Income Tax

Implementing a corporate tax system in the UAE is set to diversify government revenues away from the oil sector. This move strengthens the fiscal base and modernizes the business environment, making the UAE more attractive to investors.

We share the experts’ view on UAE´s growth. The UAE’s economic trajectory is firm upward, underpinned by diverse growth drivers and forward-looking government initiatives. With a strong banking sector and a flourishing tourism industry, the future looks bright for this dynamic nation in the heart of the Middle East.

How can TME Legal Consultants may support you?

TME Legal Consultants is a team of 45 professionals in the fields of legal-, tax-, accounting- and compliance with over 18 years of experience in the UAE and middle east region. We advise expanding SMEs on all corporate, tax and labour law issues. We assist them in establishing a presence in the UAE, provide ongoing tax advice and advise on all labour law issues. We support your company to flourish in the best possible way by helping you navigate through new regulations in the UAE concerning your business.


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