UAE economy hits one of fastest growth rates in the world, says Central Bank

Sheikh Mansour says the apex bank has terminated support measures aimed at helping the country cope with Covid-19 repercussions — a decision that reflected the banking system’s return to pre-pandemic financial strength

Waheed Abbas

Published: Wed 10 May 2023, 12:24 PM

Last updated: Wed 10 May 2023, 10:03 PM

The UAE economy will grow at a faster pace next year as both oil and non-oil sectors are expected to perform better, according to the Central Bank's (CBUAE) annual report released on Wednesday.

The country's gross domestic product (GDP) is projected to have grown at 7.6 per cent last year, almost double the rate recorded in the previous year. This is also one of the fastest growth rates in the world.

The growth rate is likely to slow down to 3.9 per cent this year but the pace will pick up again next year, with GDP forecast to expand to 4.3 per cent, showed the CBUAE annual report.

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“Real oil GDP is projected to grow by 3 per cent and 3.5 per cent in 2023 and 2024, respectively,” it said, adding that the evolution of the Russia- Ukraine conflict, the heightened risk of a global slowdown, and the possibility of further Opec+ cuts to oil production could influence the forecast.

Non-oil GDP growth is estimated to have accelerated to 6.6 per cent in 2022 from 5.8 per cent in 2021 due to a variety of factors — including the lifting of most Covid-19-related restrictions; the resulting recovery in global travel and tourism, real estate and construction sectors; the expanding manufacturing activity; and increased activity associated with world-class events such as Expo 2020 Dubai and Fifa World Cup in Qatar.

For 2023 and 2024, the Central Bank projected real non-oil GDP growth to slow to 4.2 per cent and then accelerate to 4.6 per cent, respectively, in line with global growth trends.

Covid support measures terminated

His Highness Sheikh Mansour bin Zayed Al Nahyan, Vice-President, Deputy Prime Minister, and Minister of Presidential Affairs of the UAE, and Chairman of the Board of Directors of the Central Bank, said that in its capacity as the macro-prudential authority for the UAE, the apex bank terminated most temporary support measures aimed at helping the country cope with the pandemic.

This decision, he said, reflected the banking system’s return to pre- pandemic financial strength.

The UAE posted a fiscal surplus of Dh169.6 billion ($46.19 billion) in the first nine months of 2022, a 165 per cent increase from the same period of 2021, the CBUAE said on Wednesday.

Revenues rose 35.6 per cent from January to end-September 2022 to Dh453.7 billion on the back of "strong oil and non-oil growth and favourable oil prices", it added in its annual report.

Total spending was up five per cent year-on-year to Dh248.1 billion in the nine-month period. Capital spending — measuring net investment in non-financial assets — fell nearly 20 per cent to Dh10.9 billion.

Current spending rose 6.3 per cent to Dh273.1 billion due to "a general increase in all spending categories except subsidies," the CBUAE said.

(With inputs from Reuters)

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