The UAE economy grew 3.4% y/y in Q1 2024 according to preliminary estimates, slower than the 3.9% growth recorded in Q1 2023 and also weaker than Q4 2024 growth of 4.3%. Non-oil GDP grew 4.0% y/y in Q1 (6.7% in Q4 2023), which implies a modest 1.6% expansion in the oil and gas sector in the first quarter. The restraint in hydrocarbon output means that the non-oil sectors accounted for more than 75% of total real GDP in Q1 2024, the highest on record.
While the full data set has not yet been released, the official press statement indicated that the fastest growing sector in the first quarter of this year was financial services (7.9% y/y) followed by transport and storage (7.3% y/y) and construction (6.2% y/y). Wholesale and retail trade remained the largest non-oil sector of the economy at just over 12% of GDP but grew just 2.5% y/y in Q1. Real estate services output also slowed to 2.0% y/y in Q1. We expect non-oil GDP growth to slow to 5.0% in 2024 from 6.2% in 2023.
Former ECB President Mario Draghi yesterday released a report calling for the EU to invest EUR 800bn per year and commit to issuing common bonds in order to restore EU competitiveness and boost growth. Other recommendations in the report included reducing the regulatory burden, facilitating cross border innovation, and moving to a full capital market and banking union. The main proposal to issue joint EU debt was immediately opposed by Germany, and closer integration on other fronts is unlikely to find favour in many EU countries where anti-EU sentiment has increased.
Key economic data and events today
10:00 Germany CPI (Aug) forecast 1.9% y/y
10:00 UK unemployment (Jul) forecast 4.1%
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