UAE’s 2022 growth forecast raised to 7.6%

The Central Bank expects non-oil GDP to grow by 6.1% in 2022, compared to 4.3% in its previous estimates, while it expected oil GDP to grow by 11% in 2022

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Issac John

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Published: Mon 19 Dec 2022, 4:52 PM

Last updated: Wed 21 Dec 2022, 1:37 PM

The Central Bank of the UAE on Monday raised the nation’s economic growth projection for 2022 to 7.6 per cent from its previous forecast of 6.5 per cent, citing stronger than anticipated performance of non-oil sectors including tourism, hospitality, real estate, transportation, and manufacturing.

In the quarterly review report for the third quarter of this year, the Central Bank expects non-oil GDP to grow by 6.1 per cent in 2022, compared to 4.3 per cent in its previous estimates, while it expected oil GDP to grow by 11 per cent in 2022.

The Central Bank of the UAE’s bullish projection is higher than the recent estimate of 6.5 per cent forecast by Abdullah bin Touq, Minister of Economy.

Speaking at the launch of the “Future 100” initiative to support 100 startups, Touq has said the UAE is on track to double the size of its economy to Dh3 trillion by 2031. To achieve that target, the nation needs to grow seven per cent every year, he added.

Weeks ago, the International Monetary Fund hiked the UAE’s economic growth forecast to over six per cent for 2022, a significant increase from 3.8 per cent last year. The IMF said that increased foreign investment inflow into the country after the government successfully handled the pandemic as a key growth driver. “Looking ahead, the UAE economic outlook remains positive, supported by domestic activity. We expect non-hydrocarbon growth to be around 4.0 per cent in 2023 and to accelerate over the medium-term with the implementation of ongoing reforms,” the IMF has said.

Economists said sweeping visa reforms and a move to allow 100 per cent foreign ownership of businesses were also contributing factors to the faster pace of growth. They are bullish that a string of Comprehensive Economic Partnership Agreements the UAE plans to sign would further accelerate the growth going forward. This year, the country has signed Cepa with India, Indonesia, and Israel while negotiations are underway or in the planning phase with Pakistan, Turkiye, Georgia, and Cambodia.

The CBUAE report noted that the total real GDP continued to grow at a strong pace in the third quarter of this year after a strong increase in the first half of the year, driven by an increase in oil production, in addition to the remarkable improvement in the real non-oil GDP following the easing of Covid curbs as well as the recovery in the global travel and tourism sector, the boom in the real estate and construction sectors, and the expansion of manufacturing activities.

The Central Bank said expectations of real output growth in 2023 were revised to 3.9 per cent as the oil GDP is expected to grow by 4.2 per cent, while the non-oil GDP is expected to grow by 3.0 per cent. It noted that government revenues increased by 46.7 per cent year-on-year in the first half of this year to reach Dh305.6 billion as a result of the increase in taxes and social contributions, while current spending increased by 6.1 per cent to reach Dh180.1 billion compared to a growth of 5 per cent during the same period last year.

“The UAE has benefited from a vibrant private sector, supported by comprehensive reforms and a job market that attracts the best talents. The banking sector continues to stimulate private investment as credits to the private sector increased by 4.9 per cent on an annual basis by the end of last September,” said the apex bank.

The purchasing managers’ index in the UAE rose to 56.7 in October compared to 55.4 in June, indicating growth for the 23rd consecutive month in the non-oil private sector, the CBUAE report said.

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