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UAE gears up to clock the decade’s fastest annual growth

While Dubai’s largest bank Emirates NBD elevates the growth forecast for the UAE to seven per cent in 2022, the World Bank sees the country as the fastest rebounding economy in the GCC

Propelled by a strong upswing in oil and non-oil sectors, the UAE is on track to clock its fastest annual economic growth in over a decade in 2022, economists and analysts with leading institutions say.

While Dubai’s largest bank Emirates NBD elevates the growth forecast for the UAE to seven per cent in 2022, the World Bank sees the country as the fastest rebounding economy in the GCC.

Emirates NBD’s latest upward revision of the Arab world’s second-largest economy is the highest since 2011 when the economy grew by 6.9 per cent.

"The UAE has grown faster than we had anticipated at the start of the year, both in the oil and non-oil sectors," Khatija Haque, Emirates NBD's chief economist, said on Wednesday.

Issam Abousleiman, the World Bank‘s country director of the GCC countries, the Middle East, and North Africa, believes that the UAE has consolidated its position as one of the fastest economies in the GCC to reach its pre-pandemic level subsequent to a successful vaccination programme underpinned by bold monetary and fiscal stimulus packages.

“Our projections suggest the UAE's economy will grow 4.7 per cent in 2022 which is then expected to average 3.5 per cent in the medium term,” Abousleiman was quoted by the Emirates News Agency.

According to the World Bank’s recent projections, both fiscal and external balances of the UAE would register surpluses of 4.4 per cent and 13.7 per cent of GDP respectively during 2022. However, the World Bank is currently revising these forecasts that will be published during its annual meetings in mid-October.

The GCC region is projected to expand by 5.9 per cent in 2022 before moderating to 3.7 percent and 3.3 per cent in 2023 and 2024, respectively. "These projections are expected to be revised upwards in our October forecast based on Opec+ developments of raising production quotas," the World Bank official was quoted as saying.

Analysts at the UAE’s third-largest lender, Abu Dhabi Commercial Bank, are also more bullish on their expectations, having raised the nation’s growth forecast for 2022 to 6.2 per cent from an earlier 6.0 per cent on the back of strong real non-oil GDP growth.

The International Monetary Fund has said the outlook for the UAE economy improved significantly in the first half of 2022 on the back of a surge in oil. The UAE’s oil receipts in 2022 would be about Dh700 billion, up 46 per cent from its October 2021 projection of Dh480 billion, the IMF projected, adding that the Gulf economies would receive up to $1.4 trillion in additional revenue in the next four to five years as oil prices remain high and headline inflation keeps low in the six-member economic bloc.

In a recent report, global rating agency Moody’s said that elevated oil prices during the next two years would lead to a significant improvement in the fiscal and external positions of the UAE and other GCC sovereigns, partly reversing their sharp deterioration in their balance sheet since 2015. The rating agency expects the UAE’s real GDP to grow by 6-7 per cent in 2022 as it expects oil prices to average around $105/barrel in 2022 and $95/barrel in 2023 due to geopolitical risks stemming from Russia's military invasion outweigh risks to global oil demand. “

According to research by the Dubai Investment Fund (DIF), the UAE economy is poised to grow faster than other countries in North Africa and the Middle East region over the next year. The DIF expects many of the world’s leading economies to fall into recession over the next 12 months while the UAE economy will grow faster than the average growth of other countries in the Mena region.

— issacjohn@khaleejtimes.com