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UAE: Inflation to drop to 3.2% by end of 2023; economic outlook remains strong, says minister

Stability is led by maintaining prices and receding effects of imported inflation globally, while locally, rents and wages are expected to contribute to this trend

The United Arab Emirates, represented by the Ministry of Finance, participated in the meeting of finance ministers, central bank governors, and heads of regional financial institutions in the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region.

The meeting was held on the sidelines of the 2023 Spring Meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) in Washington, DC from April 10 to 16, and discussed key strategic issues and economic growth in the region, in addition to future prospects and fiscal policy requirements to combat inflation.

Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, participated in the meeting, which was chaired by Kristalina Georgieva, Managing Director of the IMF. The meeting was attended by a number of finance ministers, central bank governors, and heads of regional financial institutions in the MENAP region.

Al Hussaini thanked Kristalina Georgieva and emphasised the pivotal role of the IMF in devising solutions to the challenges facing the world today. He said, "The UAE’s economic outlook remains strong, with growth expected to reach 3.9 percent by the end of this year. Inflation in the UAE is also projected to drop to 3.2 percent by the end of this year, down from 4.8 percent last year, led by stabilising prices and the receding effects of imported inflation globally, while locally, rents and wages are expected to contribute to this trend.”

Al Hussaini also noted that despite the economic resilience that the UAE and the wider region had demonstrated, various countries in the region remain exposed to the elevated global uncertainties as highlighted in the IMF Background Note, which underpins the need for regional collaboration efforts and to work with the Fund. This is to accelerate efforts to promote fiscal sustainability and address debt vulnerability, which remain a key concern, with potential for longer-term effects on fiscal balances and disruptions to structural development plans.

He praised the Fund’s perspective on leveraging fiscal policy to address inflationary pressures and promote economic stability in the region. “The persistence of the current economic challenges will continue to entail tradeoffs between debt sustainability and long-term sustainable development objectives”, he added.

Al Hussaini concluded his speech by emphasising the need for further discussions on these issues in the Annual Meetings in Marrakech, as well as the need to address global strategic priorities. These include advancing the SDGs agenda and growth focusing on social inclusion, in addition to addressing the fundamental issues that still affect climate finance in line with COP28 agenda, which will be hosted by the UAE later this year.

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