UAE Economy Forecast 2023: Accelerated Growth in Non-Oil Sector and Record Foreign Investments

Mustafa Abdel Azim (Dubai)
The Institute of International Finance raised its forecast for the growth of the UAE economy during the year 2023 to 3.8%, compared to its previous forecast issued last May, which amounted to 3.2%, driven by the accelerated growth of the non-oil sector, which is expected to reach 5.7%, according to Garbis Iradian, chief economist for the region. Middle East, North Africa and Central Asia at the Institute.
In his interview with Al-Ittihad, Iradian expected that foreign direct investment flows to the UAE would reach a new record this year, reaching $24 billion, stressing that the UAE’s economy will maintain its growth momentum over the next year, bringing real GDP growth to 4.6%. While the nominal GDP touches the two trillion dirhams barrier for the first time, reaching $534 billion (1.96 trillion dirhams).
Iradian said: The strong growth indicators of the UAE’s real non-oil GDP this year place the country in fifth place among the fastest growing large economies in the world (with a GDP exceeding $500 billion), as well as in 30th place among the largest economies in the world. 40 economies in the world.
The chief economist for the Middle East, North Africa and Central Asia region at the Institute of International Finance attributed the high growth of the UAE economy during the current and next years to the momentum of the recovery of private consumption and public investment on the spending side, and the booming performance of the service sectors (especially tourism and retail sales) on the production side.
He pointed out that the nominal GDP of the United Arab Emirates during the year 2022 amounted to about 504 billion dollars (equivalent to 1.85 trillion dirhams), expecting this year to reach about 505 billion dollars (1.86 trillion dirhams), before it jumps to its highest level ever. At $534 billion (equivalent to 1.96 trillion dirhams) during the next year 2024.

Sector strength
Iradian explained that although real GDP growth is expected to decline from 7.2% in 2022 to 3.8% in 2023, affected by the decline in oil production as a result of the OPEC+ agreement, real non-oil GDP growth, which is a better indicator of activity. Economic growth will remain strong at 5.7% in 2023, driven by private consumption and public investment on the spending side, and services on the production side.
According to the chief economist at the Institute of International Finance for the Middle East and North Africa, the average inflation rate will decline from 4.8% in 2022 to 3.1% in 2023, with expectations of lower global commodity prices and lower global inflation.
Iradian said: The UAE continues to record strong surpluses equivalent to 7% of the gross domestic product during the current and next years, despite expectations of a decline in average oil prices (Brent crude falling from an average of $99.6 per barrel in 2022 to $83 per barrel in 2023). ).
Foreign investment
Iradian pointed out that according to the expectations of the Institute of International Finance, the UAE is likely to attract $39 billion in foreign capital flows in 2023, with foreign direct investment reaching $24 billion, which represents more than 60% of total capital flows. Non-resident.
He stressed that the UAE is considered one of the most attractive foreign investment destinations in the world, and the largest recipient of foreign direct investment in the region, with it attracting foreign direct investment worth $24 billion in 2023, which constitutes about 4.7% of the gross domestic product (which is one of Highest rates among emerging and developing economies).
The chief economist at the Institute of International Finance for the Middle East and North Africa region attributed the high inflows of foreign direct investment to the UAE to the UAE’s diverse and open economy, attractive business environment, global infrastructure, flexible and adaptable policies, and the presence of a dynamic private sector.
Iradian noted the UAE’s expansion in investment in sectors related to sustainable development goals, which was reflected in the growth of renewable energy projects, praising the country’s efforts to stimulate green financing and investment in sustainable projects, as part of its efforts to diversify its economies away from oil and gas.
Standard investments
During the past year, the UAE attracted a record level of foreign direct investments amounting to $23 billion, rising to the sixteenth place as the largest recipient of foreign direct investment in the world, and the first destination in the Middle East, according to the UNCTAD report, which ranked the UAE as the fourth largest recipient of investments. New projects in the world, with a total of 997 projects, coming after the United States of America, Britain and India, recording an 80% increase in new projects, compared to the year 2021, while the country strengthened its position at the forefront of investment-attractive destinations in the Gulf Cooperation Council countries, after attracting 61%. Of the total foreign direct investment in the region in 2022.
Banking safety
The chief economist at the Institute of International Finance for the Middle East and North Africa said that indicators of banking safety have strengthened, including adequate liquidity, high capital adequacy ratio, higher net foreign assets, and lower non-performing loans.
Regarding the development of the real estate market, Iradian expected that the real estate market in the UAE will continue to grow, supported by strong demand, especially from foreign investors, and it is likely that the residential market in the Emirates will continue to grow, albeit at a slower pace, noting that more than half of the total real estate sales It relies on cash, and therefore is less affected by the rise in borrowing costs as a result of repeated interest increases in recent months.

2023-09-24 22:33:13
#growth #UAEs #nonoil #economy

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Recent News

Editor's Pick