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The World Bank has projected a growth rate of 4.8% for the UAE’s non-oil economy in 2023.

by Swati Gupta

May 17, 2023 23

According to the latest World Bank Gulf Economic Update (GEU) titled “The Health and Economic Burden of Non-Communicable Diseases in the GCC,” the United Arab Emirates (UAE) is expected to witness positive economic growth in 2023. The World Bank projects that the country’s real Gross Domestic Product (GDP) will grow by 2.8 percent during the year, primarily driven by the non-oil sector, which is forecasted to achieve a strong growth rate of 4.8 percent.

The World Bank officials shared these projections during a press conference held in Dubai. They highlighted that the robust growth in the non-oil sector will be fueled by strong domestic demand, particularly in key industries such as tourism, real estate, construction, transportation, and manufacturing. These sectors are expected to play a significant role in driving economic expansion and contributing to the country’s overall GDP growth in 2023.

Furthermore, the World Bank’s report also forecasts a positive outlook for the UAE’s current account balance. It anticipates a rise to 11.7 percent in 2023, indicating a favorable trade position for the country. Additionally, the report suggests that the UAE is expected to achieve a surplus in public finances, with a projected figure of 6.2 percent in 2023.

The positive economic projections for the UAE are part of a broader trend in the Gulf Cooperation Council (GCC) region. The World Bank expects the economies of the GCC countries to grow by 2.5 percent in 2023, followed by a further increase to 3.2 percent in 2024. It is worth noting that the GCC region experienced remarkable GDP growth of 7.3 percent in 2022, driven by a significant rise in oil production throughout most of that year.

The World Bank’s optimistic outlook for the UAE’s non-oil sector underscores the country’s efforts to diversify its economy and reduce dependence on oil revenues. The UAE has been actively pursuing economic diversification initiatives to build a more sustainable and resilient economy. The growth in industries such as tourism, real estate, construction, transportation, and manufacturing signifies progress towards achieving this goal.

The projections also highlight the importance of domestic demand in driving economic growth. The UAE’s focus on infrastructure development, including the construction of new tourist attractions, transportation networks, and industrial facilities, has been instrumental in attracting both domestic and international investments. These investments contribute to the overall expansion of the non-oil sector, create job opportunities, and stimulate economic activity.

The World Bank’s Gulf Economic Update provides valuable insights into the economic landscape of the region and assists policymakers, investors, and businesses in making informed decisions. It underlines the significance of sustained efforts to diversify the economy, enhance productivity, and foster a favorable business environment.

As the UAE continues to navigate through various challenges and adapt to evolving global dynamics, the projections from the World Bank offer a positive outlook for the country’s economic growth in 2023. The anticipated expansion of the non-oil sector, coupled with a favorable current account balance and surplus in public finances, reflects the resilience and potential of the UAE’s economy.

Moreover, the growth in the manufacturing sector reflects the UAE’s efforts to establish itself as a hub for advanced manufacturing, innovation, and technology. The country has launched several initiatives to promote these sectors, such as the Dubai Industrial Strategy 2030 and the Abu Dhabi Economic Vision 2030. These initiatives aim to enhance the country’s competitiveness, diversify its economy, and create a conducive business environment for local and foreign investors.

It is important for the UAE to continue implementing policies that promote economic diversification, innovation, and sustainable development. By focusing on sectors beyond oil, the country can ensure long-term prosperity, create employment opportunities, and enhance its global competitiveness. Through strategic investments and supportive measures, the UAE can further strengthen its position as a regional economic powerhouse and a hub for trade and investment.