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UAE’s non-oil sector forecast to grow by 4.8% in 2023

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UAE non-oil sector growth is driven by tourism, real estate, construction, transportation and manufacturing
  • GCC economies to grow at slower pace this year than last year
  • UAE forecast to grow 3.7% in 2023 compared to 7.6% last year
  • But Emirates witnessed rise in non-oil business activity in April

The UAE’s real GDP will grow by 2.8 percent in 2023, driven by a strong performance by the non-oil sector, according to a World Bank report.

Thanks to strong domestic demand, particularly in tourism, real estate, construction, transportation and manufacturing, the non-oil sector is expected to grow by 4.8 percent.

The current account balance will likely rise to 11.7 percent in 2023, Wam news agency reported, citing the report.

The UAE is also projected to report a surplus in public finances of 6.2 percent this year.

The GCC economies are forecast to grow by 2.5 percent in 2023 and 3.2 percent in 2024. 

The region saw a remarkable GDP growth of 7.3 percent in 2022, fuelled by a substantial increase in oil production.

Last month a Reuters poll found that the GCC economies will grow at a slower pace in 2023 than last year as expectations for muted gains in crude prices and oil production cuts take a toll on revenues.

Saudi Arabia will expand 3.2 percent this year, less than half 2022’s decade-high pace of 8.7 percent, according to the April 6-25 Reuters poll of 16 economists.

The UAE, the second biggest economy among GCC members, will grow 3.7 percent in 2023 and 4 percent next year, significantly lower than 7.6 percent last year.

However, S&P Global UAE Purchasing Managers’ Index (PMI) found that the UAE witnessed its fastest growth in new business for 18 months in April, spurring a rise in non-oil business activity nationwide.

The seasonally adjusted PMI for April hit 56.6, up from 55.9 the previous month, the highest in six months and just short of the post-pandemic peak of 56.7 recorded in August last year.

The survey revealed increased optimism among UAE businesses, reaching the highest level for seven months, buoyed by improving economic conditions, increased construction activity and greater marketing spending.