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World Bank has revised the UAE’s GDP growth forecast for 2023 and 2024 on the back of strong growth in oil and non-oil sectors.
The latest figures released by the World Bank showed the UAE economy is estimated to expand at 3.4 per cent in 2023 and 3.7 per cent in 2024 as compared to earlier forecasts of 2.8 per cent and 3.4 per cent.
In the post-pandemic period, key sectors such as travel and tourism, aviation, hospitality, real estate, trade and logistics have boosted the UAE’s economic growth and helped the country expedite the recovery.
The International Monetary Fund also said earlier that the UAE economy has quickly survived the economic impact of Covid-19, with near-term economic growth being strong, underpinned by a rebound in domestic activity, while elevated oil prices support high surpluses in the fiscal and external balances.
However, the UAE’s GDP will slow down from 6.6 per cent last year after Gulf economies in the region peaked after hitting record lows during the pandemic years.
In the GCC region, growth in 2023 is projected to average 1 per cent, 2.2 percentage points less than forecast in April 2023 and considerably less than the 7.3 per cent in 2022.
The World Bank projected in its October report that as a result of lower oil production levels amidst subdued prices, economic activity in Saudi Arabia is projected to contract by 0.9 per cent in 2023, an abrupt decrease from 8.7 per cent in 2022.
“Growth in the remaining GCC economies is expected to also slow down sharply due to less favourable oil market prospects.”
However, economic activity in the GCC is forecast to recover in 2024 under the assumption that Opec+ production quotas are relaxed.
“Among developing oil exporters, the deceleration is less marked. Their expected growth in 2023 is 2.4 per cent, less than the 4.3 per cent in 2022. Among developing oil importers, the average forecast for 2023 is 3.6 per cent, down from 4.9 per cent in 2022,” the World Bank said.
Projected growth in the Middle East and North Africa (Mena) region in 2023 is closer to the global average, unlike in 2022, when the region dramatically outpaced the rest of the world. Global activity is forecast to slow to 2.5 per cent in 2023, down from 3.1 per cent in 2022, according to the latest issue of the World Bank Mena Economic Update.
The region’s GDP is forecast to plummet to 1.9 per cent in 2023 from 6 per cent in 2022, due to oil production cuts amidst subdued oil prices, tight global financial conditions, and high inflation.
By the end of 2023, only 8 of 15 Mena economies will have returned to pre-pandemic real GDP per capita levels.
Similarly, cuts in oil production and subdued oil prices are depressing the current accounts and fiscal balances of Mena’s oil exporters. In the GCC, the current account balance is projected to fall to 9.6 per cent of GDP, down from a high of 15.7
in 2022. The fiscal surplus is forecast to sharply decrease to 0.8 per cent of GDP from 4.9 per cent in 2022.
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