UAE: IMF revises country's growth forecast upward for 2022-23

The higher projections come amidst rising oil prices as a result of the ongoing Russia-Ukraine military crisis

Waheed Abbas

Published: Thu 13 Oct 2022, 6:16 PM

Last updated: Thu 13 Oct 2022, 6:17 PM

As the fear of the world slipping into a recession grows, the International Monetary (IMF) has revised the UAE’s economic growth forecast upward for 2022 and 2023 in the latest report.

According to the IMF’s World Economic Outlook report released on Wednesday, the UAE's gross domestic product (GDP) is projected to grow 5.1 per cent this year as compared to its previous forecast of 4.2 per cent. It would be the highest growth in the past seven years.

Meanwhile, the forecast for 2023 has been upgraded to 4.2 per cent as against 3.8 per cent in its previous forecast, which is in line with the Central Bank data.

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Earlier, the UAE Central Bank reported an 8.4 per cent expansion of the UAE’s GDP in the first quarter of this year – the highest in the past decade on the back of higher oil prices and steps taken to reduce the impact of the Covid-19 pandemic.

On September 28, Emirates NBD, Dubai’s largest bank, also revised the UAE’s 2022 growth forecast higher to 7.0 per cent from 5.7 per cent earlier. But the deteriorating global economic backdrop, higher interest rates and a stronger dollar have led Emirates NBD Research to downgrade the 2023 UAE growth forecast to 3.9 per cent from 5.7 per cent earlier.

The IMF and Emirates NBD’s higher projections come amidst higher oil prices – which have been staying above $100 a barrel most of the year – due to the Russia-Ukraine military crisis that broke out on February 24, 2022.

As a result of higher oil prices, the UAE government approved a balanced budget for 2023-26 at $69.69 billion, supporting the IMF’s higher growth forecast.

Importantly, the IMF warned on Wednesday that the worst is yet to come, and for many countries, “2023 will feel like a recession.”

The International Energy Agency on Thursday also stated that high oil prices in the wake of the Opec+ production cut could push the global economy into recession.

On Wednesday, the IMF downgraded next year’s growth forecast from 2.9 per cent to 2.7 per cent, but left this year’s growth unchanged at 3.2 per cent. This outlook has deteriorated since the start of the year.

The UN's global financial agency projected a 5.2 per cent inflation rate for the UAE this year – a massive increase from last year’s 0.2 per cent. Next year, inflation is expected to ease to 3.6 per cent.

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