meed-logo

line1 line2 line3
SIGN IN / REGISTER

UAE economy steers clear of global woes

24 April 2023

Related reads on the UAE:

> Two billion riders use Dubai Metro

> Surge in tourists boosts Dubai hospitality

> Abu Dhabi strengthens its position at home

> UAE calls for reform of international financial institutions

> UAE president appoints son as Abu Dhabi crown prince

> UAE and Israel sign customs cooperation deal

> UAE moves ahead with digital currency

 

The UAE economy is expected to maintain a course of robust economic growth in 2023, avoiding the effects of the creeping global economic slowdown.

The Washington-based IMF projects a growth rate of 3.5 per cent for the country in 2023 – a rate of expansion well clear of the 2.8 per cent global average amid what has become a worldwide slowdown. The forecast is also ahead of the projected 3.1 per cent growth rate for the Middle East and North Africa.

Though a step down from the 7.4 per cent growth in 2022, and a modest downgrade of 0.7 per cent from the projection in October of a growth rate of 4.2 per cent this year, the UAE’s economic activity remains firmly buoyant. Its growth is forecast to rise again to 3.9 per cent in 2024.

The minor slowdown in the UAE’s economic growth is primarily due to Opec+ cutting oil production quotas, which is reversing some of the past year’s increases in oil production across the region. However, despite the cuts and the weakening of oil prices, the UAE’s oil sector revenues are expected to remain healthy, maintaining a government budget surplus of approximately 3.7 per cent of GDP this year.

Inflationary pressures have also eased since the peak of last year. Disinflation is expected to continue in the coming months, reaching 2.1 per cent this year, down from 4.8 per cent in 2022.

In light of such considerations, the Central Bank of the UAE has also put out a more optimistic projection of a sustained GDP growth rate of 3.9 per cent in 2023. 

More positive still is Issam Abu Suleiman, regional director for the GCC at the World Bank, who has forecast that the UAE economy will continue to grow by 4.1 per cent despite the challenging global economic conditions.

More limited projections also exist, including a report by the Institute of Chartered Accountants in England & Wales and Oxford Economics that estimates that the growth will slow to 3.2 per cent in 2023, as weaker oil growth weighs on the more buoyant 3.9 per cent growth in the non-oil sector.

Positive sentiment

For businesses on the ground, the projection of close to 4 per cent non-oil growth remains cause for optimism. 

This has been reflected in the S&P UAE Purchasing Manager’s Index (PMI), which rose yet higher from 54.3 in February to 55.9 in March (with a value over 50 indicating growth).

S&P’s report noted a pick-up in new order growth to a five-month high, as well as a rise in capacity pressures that has seen the fastest increase in employment since July 2016. The construction sector was particularly active in hiring amid a slew of new project launches led by off-plan real estate schemes.

The UAE aims to double the size of its economy by 2031 as it continues to diversify away from oil and gas

The UAE’s rebounding real estate market is more generally a key driver of the country’s sustained non-oil growth. House prices are on the rise in Abu Dhabi and property sales in Dubai have hit decade highs in recent months. 

Tourism is also recovering, with Dubai regaining its spot as one of the world’s busiest aviation hubs. International visitors are forecast to increase by 20 per cent in 2023.

Ipsos’ Primary Consumer Sentiment Index ranked the UAE second in the world in terms of consumer perceptions of the strength of the economy, with 63 per cent of respondents believing it to have a strong economy. Of those polled, 81 per cent also reported being comfortable with investing in the future and 86 per cent expecting the local economy to be stronger in the next six months.

Ratings agency Moody’s has also reaffirmed the UAE’s long-term local and foreign currency issuer ratings at Aa2 with a stable outlook, citing exceptionally low credit risk with its well-balanced budget targets and limited federal spending requirements. 

The introduction of corporate income tax, effective 1 June 2023, will result in further government revenue growth starting from 2025.

Moody’s also pointed to the UAE’s ongoing economic diversification. The country’s progress to date in this area remains well ahead of its GCC peers in terms of the expansion of its non-hydrocarbons revenue, private sector development and overall international attractiveness to foreign businesses and talent.

Future outlook

Looking ahead, the UAE aims to double the size of its economy by 2031 as it continues to diversify away from oil and gas. To achieve this, it needs an average of 7 per cent GDP growth a year, which it hopes to achieve by forging trade agreements and investing in global growth sectors such as green hydrogen.

The UAE’s foreign trade rose by 17 per cent year-on-year to reach AED2.2tn ($599.1bn) in 2022. In the decades ahead, the country aims to attract AED550bn in foreign direct investment by 2031 and AED1tn by 2051.

Abdullah bin Touq al-Marri, the UAE’s minister of economy, has noted that the UAE’s active business environment, which is supported by both national and foreign private sectors and an attractive labour market for international talent, has contributed to the growth of the economy.

By 2030, the government aims to increase the number of small and medium-sized enterprises (SMEs) to 1 million and raise the contribution of SMEs to the country’s non-oil GDP to 63.5 per cent.

In January this year, Dubai also launched its D33 economic agenda, which aims to grow the emirate’s economy to AED32tn by 2033 through a combination of transformative projects and a doubling of foreign trade to AED25.6tn by expanding trade links with Africa, Latin America and Southeast Asia.

This month's special report on the UAE includes: 

> GOVERNMENT: Abu Dhabi strengthens its position at home

> ECONOMY: UAE economy steers clear of global woes

> BANKING: UAE lenders chart a route to growth

> UPSTREAM: Strategic Adnoc projects register notable progress

> DOWNSTREAM: Gas takes centre stage in Adnoc downstream expansion

> POWER: UAE power sector shapes up ahead of Cop28

> WATER: UAE begins massive reverse osmosis buildup

> CONSTRUCTION: Dubai construction needs major project launches

https://image.digitalinsightresearch.in/uploads/NewsArticle/10761289/main.gif
John Bambridge

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • AD Ports to potentially operate Kuwait’s Shuaiba port

    16 December 2025

    Abu Dhabi Ports Group (AD Ports) has signed a memorandum of understanding (MoU) with Kuwait Ports Authority (KPA) to explore developing and operating the container terminal at Kuwait’s Shuaiba port under a concession agreement.

    Established in the 1960s, Shuaiba is Kuwait’s oldest port. It covers 2.2 million square metres (sq m) and has 20 berths. According to KPA’s website, the container terminal has a storage area of 318,000 sq m.

    Located about 60km south of Kuwait City, the port handles commercial cargo, heavy equipment, raw materials and chemicals used across multiple industries.

    KPA said the MoU is a preliminary first step towards a concession contract, subject to completion of the required studies.

    Under the agreement, AD Ports will prepare the technical, environmental and financial studies needed for the project, including infrastructure requirements.

    For its part, KPA will designate the project site at Shuaiba port and collaborate with AD Ports to complete the required studies. It will also facilitate obtaining all necessary licences and approvals from the relevant Kuwaiti authorities.

    The proposed partnership is strategically significant for Abu Dhabi Ports Group, as it would extend its footprint in a major Gulf market and strengthen its regional network of ports and logistics assets.

    AD Ports’ presence at Shuaiba would position the group along key Gulf trade lanes and support its broader strategy of building end-to-end maritime and logistics corridors by linking port operations with shipping, industrial zones and supply chain services.

    READ THE DECEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

    Prospects widen as Middle East rail projects are delivered; India’s L&T storms up MEED’s EPC contractor ranking; Manama balances growth with fiscal challenges

    Distributed to senior decision-makers in the region and around the world, the December 2025 edition of MEED Business Review includes:

    > BAHRAIN MARKET FOCUS: Manama pursues reform amid strain
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15254300/main4910.jpg
    Yasir Iqbal
  • DP World launches new UAE-Iraq sea route

    16 December 2025

    UAE-based port operator DP World has launched a new 36-hour maritime service linking Dubai’s Mina Rashid with Iraq’s Umm Qasr Port.

    The new service, called DP World Express, offers a faster option than overland trucking, with a capacity to carry up to 145 accompanied trailers per sailing.

    The service was inaugurated at Mina Rashid, and a dedicated RoRo vessel was assigned to the route.

    The vessel was recently upgraded at Drydocks World and is scheduled to begin operations in December 2025.

    DP World Express will transport non-containerised, full-trailer units with drivers on board, delivering a direct, secure, door-to-door solution between the UAE and Iraq. The service will also support onward movement to neighbouring countries, improving reliability while reducing cross-border delays and administrative complexity.

    The new route responds to demand for quicker, more controlled trailer movements by lowering handling needs and simplifying planning across key trading sectors.

    This corridor strengthens access to Iraq’s main commercial centres and enhances connectivity to Jordan and Syria via established inland routes, supporting regional trade growth. On the return leg, the vessel will carry Iraqi export cargo to the UAE, helping expand two-way trade and improving efficiency across regional supply chains.

    The service further develops DP World’s integrated logistics offering by expanding direct maritime connectivity for non-containerised cargo. It is also expected to support sustainability goals by reducing CO2 emissions compared with alternative transport and logistics options.

    The launch event was attended by senior officials from the UAE and Iraq, including Muzaffar Mustafa Al-Jubouri, Iraqi ambassador to the UAE, and Sultan Ahmed Bin Sulayem, group chairman and CEO of DP World, among others.

    DP World is a global provider of end-to-end supply chain and logistics solutions, specialising in port operations, economic zones, maritime services and digital trade platforms. The company operates more than 60 marine and inland terminals in over 30 countries, handling around 88 million twenty-foot equivalent units of containerised cargo annually.

    READ THE DECEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

    Prospects widen as Middle East rail projects are delivered; India’s L&T storms up MEED’s EPC contractor ranking; Manama balances growth with fiscal challenges

    Distributed to senior decision-makers in the region and around the world, the December 2025 edition of MEED Business Review includes:

    > BAHRAIN MARKET FOCUS: Manama pursues reform amid strain
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15251327/main.JPG
    Yasir Iqbal
  • Local firm wins key road intersection deal in Dubai

    16 December 2025

     

    Dubai-based firm DBB Contracting has won a contract from Dubai’s Roads & Transport Authority (RTA) for the development of the Sheikh Zayed Bin Hamdan Al-Nahyan Street intersection with Al-Awir Road and Al-Manama Street.

    The scope includes the construction of 2.3 kilometres (km) of bridges, lane expansion, and the provision of entrances and exits serving the surrounding areas.

    The project will increase the street’s capacity from 5,200 vehicles to 14,400 vehicles per hour in each direction.

    It will reduce travel time from 20 minutes to five minutes.

    The project will serve areas with a combined population of over 600,000 residents and visitors.

    The mobilisation works are ongoing. The project is slated for completion by 2028.

    Planning for growth

    In March 2021, the government launched the Dubai 2040 Urban Master Plan. Its launch referenced studies indicating that the emirate’s population will reach 5.8 million by 2040, up from 3.3 million in 2020. The daytime population is set to increase from 4.5 million in 2020 to 7.8 million in 2040.

    In December 2022, Sheikh Mohammed Bin Rashid Al-Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, approved the 20-Minute City Policy as part of the second phase of the Dubai 2040 Urban Master Plan. 

    In addition to the road projects, the RTA’s Dubai Metro Blue Line extension forms part of Dubai’s plans to improve residents’ quality of life by cutting journey times, as outlined in the policy.

    The policy aims to ensure that residents can meet 80% of their daily needs within a 20-minute walk or bike ride. This goal will be achieved by developing integrated service centres with all necessary facilities and by increasing population density around mass transit stations.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15251261/main.jpg
    Yasir Iqbal
  • Spetco completes clarification process for Kuwait oil contract

    16 December 2025

     

    Local contractor Spetco International has completed the clarification process with state-owned upstream operator Kuwait Oil Company (KOC) for a contract to develop the planned Mutriba remote boosting facility in Kuwait.

    In October, Ahmadi-based Spetco submitted the lowest bid for the contract, valued at KD88.2m ($288.7m).

    KOC tendered the project earlier this year and set a bid submission deadline of 29 June. The deadline was extended several times before three Kuwait-based companies submitted bids.

    The full list of the bids submitted was:

    • Spetco International – KD88,209,236 ($288.7m)
    • Combined Group Contracting – KD123,000,000 ($402.5m)
    • Alghanim International General Trading & Contracting – KD129,450,000 ($423.7m)

    One source said: “The large price gap between the lowest bid and the other bids that were submitted meant that KOC sought to revalidate the quote form Spetco and ensure that the company was conforming to the tender requirements and specifications.”

    The project uses the build-own-operate-transfer (BOOT) contract model.

    The project’s scope includes:

    • Development of the Mutriba oil field
    • Installation of the degassing station
    • Installation of manifolds
    • Installation of condensate facilities
    • Installation of wellhead separation units
    • Installation of the pumping system
    • Installation of wellhead facilities
    • Installation of oil and gas treatment plants
    • Installation of a natural gas liquids plant
    • Installation of a water and gas injection plant
    • Construction of associated utilities and facilities

    The onshore Mutriba oil field is located in northwest Kuwait and is being developed as part of Kuwait’s broader strategy to expand its upstream capacity.

    Commercial output from Mutriba officially began on 15 June this year, after several wells were connected to KOC’s production facilities.

    The field, in a previously undeveloped part of Kuwait, covers more than 230 square kilometres and lies outside the area of fields already operated by KOC.

    In September, Kuwait’s Oil Minister Tareq Al‑Roumi said that the country’s oil production capacity had reached 3.2 million barrels a day (b/d), its highest level in more than 10 years.

    Despite the higher capacity, Kuwait says it will continue to abide by Opec+ agreements and will produce 2.559 million b/d.

    READ THE DECEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

    Prospects widen as Middle East rail projects are delivered; India’s L&T storms up MEED’s EPC contractor ranking; Manama balances growth with fiscal challenges

    Distributed to senior decision-makers in the region and around the world, the December 2025 edition of MEED Business Review includes:

    > BAHRAIN MARKET FOCUS: Manama pursues reform amid strain
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15249101/main0844.png
    Wil Crisp
  • Kuwait awards oil pipeline contract

    16 December 2025

    State-owned upstream operator Kuwait Oil Company (KOC) has awarded a contract to East Ahmadi-based Mechanical Engineering & Contracting Company (MECC) to build an oil pipeline network.

    The project scope includes installing group manifolds and trunk lines in North Kuwait, according to a statement from Kuwait’s Central Agency for Public Tenders (CAPT).

    The contract was awarded on 8 December and has a value of KD34.7m ($113.1m).

    MECC outbid three other companies, who were:

    • Combined Group Contracting Company – KD35.4m
    • Sayed Hamid Behbehani & Sons Company – KD39.8m
    • Heavy Engineering Industries & Shipbuilding Company (Heisco) – KD40.1m

    The project will install infrastructure to transport liquids from oil wells to gathering centers 29, 30m and 31.

    Kuwait is set to record its highest total annual value for oil, gas and chemicals contract awards since 2017, according to data from regional project tracker MEED Projects.

    Earlier in December, MEED reported that 19 contracts totalling $1.9bn had been awarded so far in 2025.

    This is more than four times the value of contract awards in the same sectors last year, when they totalled just $436m.

    It is also above the $1.7bn peak recorded in 2021, but it remains far lower than the values of contract awards seen in 2014-17, when several large-scale, multibillion-dollar projects were awarded in the country.

    The surge in the value of contract awards has come after Kuwait’s emir indefinitely dissolved parliament and suspended some of the country’s constitutional articles in May 2024.

    Prior to the suspension of parliament, Kuwait experienced very low levels of project awards for several years amid political gridlock and infighting between the cabinet and parliament.

    This meant that important project decisions could not be made, which was seen as a major obstacle to the progress of strategic oil projects.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15249103/main.png
    Wil Crisp