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UAE growth defies the global gloom

26 April 2023

Commentary
John Bambridge
Analysis editor

For the second year running, the UAE is headed for a robust economic growth picture against a backdrop of far gloomier global and regional average growth projections. Also for the second year, there is no telling whether the country’s growth will limit itself to the conservative estimates of global financial institutions, or whether, as in 2022, it will break those bonds. 

In its April update, the Washington-based IMF raised its calculation of the UAE’s real GDP growth rate for 2022 to 7.4 per cent. This is up from a projection of just 5.1 per cent made in October last year, with just two months left on the clock. In 2023, the growth projection is 3.5 per cent, a little lower than the 4.2 per cent forecast in October, but after the UAE’s forecast-defying performance in 2022, it is anyone’s guess where this year’s growth will end up.

While a surge in oil prices last year was partially responsible for the UAE’s stellar economic performance – just as Opec+ production cuts are tied to the projected dip in growth in 2023 – the UAE is also seeing a period of non-oil sector buoyancy. This year, oil growth is, if anything, weighing on stronger non-oil growth, which is being driven by surging consumer demand in certain sectors, particularly in property and tourism. The construction sector has also re-entered hiring mode amid a returning glut of off-plan real estate projects.

The UAE is meanwhile experiencing a growth spurt in trade and investment – with foreign trade rising by 17 per cent in 2022 – and hopes to continue this trend with an ever-expansive role in global trade. Recent trade deals with India, Indonesia and Israel are all pertinent to these ambitions, and this all-business approach is why it will take more than a few ripples in the diplomatic pond to disturb the country’s relations with these economic allies.

The UAE is also working on building its global leadership role. Abu Dhabi will be pulling out all the stops this year to ensure that the Cop28 UN Climate Change Conference is an international diplomatic triumph. 

The appointment of Sheikh Mohamed bin Zayed al-Nahyan’s eldest son, Sheikh Khaled bin Mohamed al-Nahyan, as crown prince, should give further voice to the next generation of leadership. As the UAE sets its sights on eye-watering economic targets, reaching in all directions for avenues of future growth, more voices can only assist its intense economic brainstorming.

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

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John Bambridge

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