UAE economy to remain ‘robust’ and grow 4.2% in 2023

Reuters/Satish Kumar

The UAE’s economy is forecast to grow at 4.2 percent this year, Arab Monetary Fund (AMF) said in a new report.

The country’s economic growth is likely to remain “robust”, averaging 4.6 percent from 2022 to 2024, driven by rising oil prices and improved business confidence, state-run WAM news agency reported, citing AMF’s “Arab Economic Outlook” report.

However, the consumer price index in the UAE was likely to fall 2.9 percent in 2023 and 2.57 percent in 2024.

With stable oil and gas prices and lower prices for basic goods, such as agricultural products, the report projected a 3.4 percent growth for Arab economies amid tighter monetary policies to tame inflation.

Arab countries with economic reform programmes and strategies to diversify their economies, empower the private sector and invest in human capital are more able to cope with economic shocks, the report added.

AMF said that the economic growth rate of Arab countries will rise to four percent in 2024, mainly due to the expected stability of oil and gas prices, basic goods prices and controlled inflation.

Higher energy prices will boost the economic growth of major Arab oil exporters in 2023 and 2024, with their economies expected to grow by 3.4 percent in 2023 and 4.2 percent in 2024.

Gulf Cooperation Council (GCC) countries have a positive outlook for 2023, with an expected GDP growth of 3.4 percent, driven by their efforts to diversify their sources of income.

Higher oil prices will lead to rise in oil revenues, improved financial outcomes, foreign exchange reserves and fiscal positions, the report noted.

Additionally, promoting workforce localisation and increasing the participation of citizens in the private sector will be a key approach in achieving growth in GCC countries, most notably in the UAE, Saudi Arabia and Bahrain.

AMF said that Arab countries that import oil will see their growth rate increase from 3.1 percent in 2023 to four percent in 2024 after inflation is controlled by 2023-end and monetary policies are eased.