RIYADH: Underpinned by a rebound in domestic activity, the UAE economy has quickly survived the economic impact of COVID-19, with near-term economic growth remaining strong, according to a top International Monetary Fund official.
In addition, elevated oil prices supported high surpluses in the fiscal and external balances.
“Economic growth has been robust this year, led by a strong rebound in tourism, construction, and activity related to the Dubai World Expo, as well as higher oil production in line with the Organization of the Petroleum Exporting Countries and allies’ production agreements,” Jihad Azour, director of Middle East and Central Asia Department, IMF, told the Emirates News Agency.
“The economic recovery is gaining momentum driven by return of economic cycle.”
According to the latest IMF review, the UAE’s gross domestic product growth is projected to reach above 6 percent in 2022, improving from 3.8 percent in 2021. Inflation has risen with global trends and is expected to average just over 5 percent this year.
Fiscal and external surpluses have increased further, benefiting from the higher oil prices as well as the removal of the temporary COVID-crisis-related fiscal support to businesses and households as the pandemic has gradually waned. Increased global uncertainty led to larger financial inflows, contributing to rapid real estate price growth in some segments.
Azour went on to say that the UAE economic outlook remains positive, supported by domestic activity. “We expect non-hydrocarbon growth to be around 4 percent in 2023 and to accelerate over the medium term with the implementation of ongoing reforms,” he said.
Azour added: “Inflationary pressures are projected to moderate gradually, including from the impact of tightening financial conditions. Further development of domestic capital markets, including through the issuance of local currency debt by the federal government will also support growth.”
Talking about the Middle East and Central Asia, he said that economic activity in the region has been resilient thus far, with multispeed recovery continuing in 2022.
“We project that the Middle East and North African region to grow at 5 percent this year, up from 4.1 percent in 2021,” he said.
“However, the worsening of global conditions will weigh on the outlook for next year with growth slowing to 3.6 percent. Growth is projected at 5.2 percent this year for the oil exporters, with high oil prices and robust non-oil GDP growth offsetting the global headwinds.”
Azour underlined the importance of stability on the monetary side, on the financial side, and with regard to inflation.
“Financial and economic stability is important to enable the investor to increase the level of the investment and the citizen to be able to have purchasing power and to maintain it,” he concluded.
