Driven by robust domestic demand, particularly across tourism, real estate, construction, transportation, and manufacturing sectors, the UAE’s non-oil sector is poised to achieve strong growth of 4.8 per cent in 2023, the World Bank said on Wednesday.
The current account balance of the UAE is expected to surge to 11.7 per cent in 2023 as the Arab world’s second-largest economy eyes a surplus in public finances of 6.2 per cent in 2023, officials of the World Bank said at a media briefing in Dubai.
The Washington-based bank’s bullish projection comes in the wake of a report by the Central Bank (CBUAE) forecasting a faster pace of economic growth for the country next year as both oil and non-oil sectors are expected to perform better. The CBUAE’s forecast was in line with the International Monetary Fund’s forecast of a faster pace of expansion for the economy next year.
In its recent World Economic Outlook, the IMF revised down the UAE’s 2023 growth forecast by 0.7 per cent to 3.5 per cent in line with the global economy. But it revised upward last year’s growth from 5.1 per cent in October 2022 to 7.4 per cent.
In the new World Bank Gulf Economic Update (GEU) titled, The Health and Economic Burden of Non-Communicable Diseases in the GCC, bank officials said the real GDP of the UAE, however, will grow by 2.8 per cent in 2023. The World bank’s forecast falls short of the CBUAE’s projection of 3.9 per cent for this year.
According to the GEU report, the GCC economies will grow at a slower pace in 2023 compared to the previous year weighed by lower earnings from oil and gas and a global economic slowdown. The GCC is expected to grow by 2.5 per cent in 2023 and 3.2 per cent in 2024, compared with a GDP growth of 7.3 per cent in 2022, which was fuelled by a strong increase in oil production for most of that year.
The weaker performance is driven primarily by lower hydrocarbon GDP, which is expected to contract by 1.3 per cent in 2023 after the Opec+ April 2023 production cut announcement and the global economic slowdown, said the World Bank report.
However, the bank noted that robust growth in the non-oil sectors, which is anticipated to reach 4.6 per cent in 2023, will dampen the shortfall in hydrocarbon activities, driven primarily by private consumption, fixed investments, and looser fiscal policy in response to 2023’s relatively high oil revenues.
Saudi Arabia will see its GDP growth fall to 2.2 in 2023 as oil production retreats on the back of Opec+ agreed production cuts and oil sector GDP contracts by 2.0 per cent. The real GDP of Qatar is estimated to slow down to 3.3 per cent this year after the strong performance registered in 2022, with the hydrocarbon sector expanding by 0.8 per cent.
Kuwait’s economic growth is expected to slow to 1.3 per cent in 2023 as the oil sector is anticipated to contract by 2.2 per cent. In Bahrain, growth is projected to moderate to 2.7 per cent in 2023 before averaging 3.2 per cent during 2024-25 as fiscal adjustments continue while Oman’s economy is forecast to continue to grow, but at a slower pace, driven primarily by the accelerated implementation of structural reforms under Vision 2040. Overall growth of Oman is projected to moderate to 1.5 per cent in 2023 reflecting softening global demand, the report said