Driven by higher oil prices and improved business confidence, the UAE’s economic growth is on track to remain robust, averaging 4.6 per cent from 2022 to 2024, the Arab Monetary Fund (AMF) has said.
In 2023, the AMF’s “Arab Economic Outlook Report” forecasts a 4.2 per cent growth rate, accompanied by a decline in the consumer price index to 2.9 per cent in 2023 and 2.57 per cent in 2024.
The report projected a 3.4 per cent growth for Arab economies on the back of stable oil and gas prices and lower prices for basic goods, such as agricultural products, accompanied by tighter monetary policies to curb inflation.
The International Monetary Fund (IMF) has projected that the UAE economy will expand at a faster pace next year and lowered the global growth outlook slightly amidst uncertainty in global financial system. It projected that the UAE GDP will expand at 3.9 per cent as compared to 3.5 per cent this year, while the World Bank projected the GCC’s second-biggest economy to grow at 3.3 per cent in 2023, down from 4.1 per cent forecast in October. The UAE’s non-oil sector is poised to achieve stronger growth of 4.8 per cent, driven by robust domestic demand, particularly across tourism, real estate, construction, transportation, and manufacturing sectors. The fastest growing economy within the GCC in 2023 is projected to be Oman, with growth seen at 4.3 per cent.
The AMF report said that most Arab countries will improve their resilience, enhance business environments, empower the private sector and invest in human capital on the back of economic reform programmes and strategies to diversify their economies. The economic growth rate of Arab countries will rise to 4.0 per cent 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 per cent in 2023 and by 4.2 per cent in 2024, the report noted.
Arab countries that import oil will see their growth rate increase from 3.1 per cent in 2023 to 4.0 per cent in 2024, after inflation is controlled by the end of this year and monetary policies are eased, said the report.
The GCC countries have a positive outlook for 2023, with an expected GDP growth of 3.4 per cent, mainly due to their efforts to diversify their sources of income, the report added, noting that oil prices are likely to remain stable and high, resulting in higher oil revenues and improved financial outcomes, foreign exchange reserves and fiscal positions, said the AMF.
The report stressed that promoting workforce localisation and increasing the participation of citizens in the private sector is another key approach to achieving growth in GCC countries, most notably in the UAE, Saudi Arabia and Bahrain.