UAE Economic Growth Outlook 2023
The UAE has a global reputation as an economic powerhouse, and 2022 didn’t disappoint. Long upheld as an outstanding place to do business, the UAE boasts a great geographic location, one of the world’s most lucrative imports and exports market, no profit repatriation restrictions, no federal income taxation and - as we will see - strong economic growth that is set to continue over the short, medium and long-term.
Beyond this irresistible collection of corporate benefits, the seven Emirates also promise a lifestyle like no other. Lavish luxury, towering skyscrapers and the world’s best shopping pair with an extensive programme of cultural events, a vibrant expatriate community (counting residents from 200 nations), world-class transport and infrastructure as well as year-round sunshine. Living in the UAE really is a dream.
In this post, we’re going to take a look back at the UAE’s economic growth rate for the past year, before considering the growth forecast for 2023 and beyond.
UAE Economic Growth in 2022
The past year has been one of growth for the UAE. In the words of Mr. Al-Eyd, who issued a statement at the conclusion of discussions with the International Monetary Fund (IMF) in November 2022, “economic growth has been robust this year.” Specifically, GDP growth is forecast to reach above 6% in 2022, up from 3.8% last year. This expansion is the highest since 2011, when the economy grew by 6.9%.
The growth is a result of a strong return in the tourist and construction industries, as well as activity related to the Dubai World Expo and higher oil production in line with OPEC+ production agreements. In terms of inflation, this is aligned with global trends and is expected to average at just over 5% in 2022.
Both fiscal and external surpluses increased this year, thanks to higher oil prices and the removal of temporary fiscal support for COVID-19. Additionally, global uncertainty led to larger financial inflows, contributing to rapid real estate price growth in some segments. Trade crossed Dh1 trillion and re-exports surpassed Dh300 billion for the first time ever. All in all, 2022 has been an excellent year for companies based in the UAE.
UAE GDP growth forecast for 2023
And the UAE’s economic growth forecast for 2023 looks just as promising. Indeed, Mr Al-Eyd said in his aforementioned statement that:
the UAE economic outlook remains positive, supported by domestic activity.
The IMF expects the UAE’s non-oil economy to grow by about 4% in 2023 and accelerate over the medium-term as ongoing reforms are implemented.
This figure will make the UAE the fastest growing economy in the Arabian Gulf in 2023, outpacing Saudi Arabia (3.7%), Bahrain (3%), Oman (4.1%), Kuwait (2.6%) and Qatar (2.4%).
In the remainder of his statement, Mr Al-Eyd noted that inflationary pressures, which are relatively low in the UAE compared with the rest of the world, are expected to moderate gradually. Further development of domestic capital markets, including through the issuance of local currency debt by the federal government will also support growth.
Mr Al-Eyd does, however, draw attention to a number of external uncertainties, which may influence UAE growth rate, namely the impacts of global economic and financial headwinds, geopolitical developments and the recently announced OPEC+ production cuts. Nevertheless, higher oil prices and healthy fiscal buffers help mitigate risks, while enhancing reform efforts would pose upside risks to medium-term growth.
Looking ahead
Committed to promoting the UAE’s economic growth rate, the Ministry of Economy has launched a number of strategies that achieve sustainable economic expansion. These are based on science and advanced technologies and capitalise on exceptional talent, skills and competencies.
The strategies in question are UAE Centennial 2071, the Fifty Economic Plan, the Emirates Blockchain Strategy, the UAE’s Green Growth Strategy, UAE Strategy for the Fourth Industrial Revolution, the UAE Circular Economy Policy, the National Program for Artificial Intelligence 2031 and the UAE Energy Strategy 2050.
If you’re impressed with the UAE’s economic outlook and want your company to reap all the related benefits, contact us today to discuss forming your company in the UAE. We’d be delighted to assist you.
Written by
Adrian Oton
CEO, Europe Emirates Group
