GCC Will Outperform Global Economy in 2024

Group’s Global Investment Outlook 2024 report recommends investors diversify asset allocation, points to opportunities in MENA ESG investing.

The economies of the UAE and Gulf countries will outpace the global forecast for 2024, helped by the domestic multi-year investment cycle in the region, according to First Abu Dhabi Bank’s 2024 Global Investment Outlook (GIO) Report: ‘Making a positive impact.’

Despite recent geopolitical headwinds and muted global recovery, FAB expects national and regional growth to be driven by the robust demand in tourism, real estate, transportation, and manufacturing sectors. FAB sees the UAE’s GDP expanding 3.7% in 2023 and 4% in 2024, and the GCC’s by 3.4% in 2024 — higher than the IMF’s global forecast of 3.1% and 2.1% for the United States in 2024.

The GIO report, written by the bank’s industry experts, examines the current global economic and investment environment, providing insights into key macroeconomic trends.

FAB’s outlook notes that the GCC region continues to be supported by strong growth in non-oil GDP, with 3.4% expected in the medium term as countries in the region continue to diversify their economies.

In financial markets, FAB recommends investors diversify the asset allocation in their portfolios as market and economic volatility looks likely to continue in 2024 and build a defensive portfolio to provide flexibility. The report points out tailwinds such as higher fiscal spending, rapid disinflation and a tight labour market so far supporting consumption and spending and lifting global equity markets but notes a delayed impact of monetary policy decisions could soon take effect until interest rates and inflation come down.

Michel Longhini, Group Head of FAB Global Private Banking, said: “Investors will need to remain cautious given the rise and heightened levels of interest rates which will continue to impact economies and geopolitical risks which could increase volatility. Global economic growth is expected to slow down in 2024. However, our regional markets look resilient, with economic growth expected to pick up, driven by successful economic diversification and reforms.

“In the ESG investing space, MENA markets provide some interesting opportunities along with diversification benefits for global portfolios. This year’s Global Investment Outlook theme — ‘Interest Rate Peaks and ESG Integration: Shaping the Future of Global Asset Allocation’ — identifies these investment opportunities and addresses key issues that will drive return for investors. FAB clients can benefit from the input and the research of the entire team of economists and investment professionals whose views have been brought together here.”

Alongside key economic indicators, the FAB GIO considers a range of trends shaping future growth prospects, including a focus on specific industries. The report includes focused chapters on ESG (environmental, social and governance), oil, MENA markets outlook, emerging markets outlook, global markets outlook, real estate, and developments in investment products and solutions.

The GIO report also highlights what FAB believes are the five key risks for 2024: artificial intelligence, the US elections, tensions in the Middle East and Africa, climate change, and US-China relations.