The United Arab Emirates’ economy is expected to rebound next year, with both the oil and non-oil sectors expected to perform better, according to the Central Bank’s annual report released on Wednesday.
The UAE’s gross domestic product (GDP) grew at a rapid pace of 7.6 percent last year, making it one of the fastest-growing economies in the world. However, the growth rate is projected to slow down to 3.9 percent this year due to the impact of the COVID-19 pandemic and low oil prices.
Despite the challenges faced by the global economy, the Central Bank of UAE (CBUAE) expects the country’s GDP to rebound in 2024, with a projected growth rate of 4.3 percent. The report attributed the expected growth to the country’s strong infrastructure and diversified economy.
“The UAE’s economy is expected to continue its growth trajectory, reflecting the robustness of its diversified economic structure and the resilience of its institutions,” the CBUAE said in the report.
The non-oil sector is expected to play a key role in driving the UAE’s economic growth in the coming years, with the government implementing various measures to support the sector. This includes investments in key industries such as healthcare, education, and technology, as well as the promotion of entrepreneurship and innovation.
The CBUAE also noted that the country’s fiscal position remains strong, with a relatively low debt-to-GDP ratio of around 21 percent. The government’s efforts to diversify the economy away from oil have helped to strengthen the country’s fiscal position and reduce its reliance on volatile oil prices.
“The UAE’s solid fiscal position, low public debt, and substantial foreign assets provide a strong buffer against external shocks and support its creditworthiness,” the report stated.
The report also highlighted the Central Bank’s efforts to support the economy during the pandemic. This includes the launch of a AED 256 billion ($69.7 billion) stimulus package in 2020 to support businesses and individuals impacted by the pandemic. The package included loan deferrals, fee waivers, and other measures aimed at providing liquidity to businesses and individuals.
Looking ahead, the CBUAE said that it will continue to monitor the economic situation closely and take necessary measures to support the country’s economic growth. This includes maintaining a supportive monetary policy, implementing structural reforms to enhance the economy’s competitiveness, and promoting sustainable growth.
“The Central Bank remains committed to supporting economic growth and maintaining financial stability, while also safeguarding the country’s long-term economic prospects,” the report concluded.
The Central Bank’s annual report also noted that the UAE’s banking sector remains robust and resilient, despite the challenging economic conditions. The report highlighted the banks’ strong capital buffers, healthy liquidity positions, and low levels of non-performing loans.
The report also noted that the country’s real estate market has shown signs of recovery, with prices stabilizing in some segments and increasing in others. The report attributed the recovery to various factors, including increased government spending, low interest rates, and the Expo 2020 Dubai event.
However, the report also highlighted some risks and challenges that could impact the country’s economic outlook. This includes the ongoing COVID-19 pandemic, geopolitical tensions in the region, and the potential impact of rising interest rates and inflation on the global economy.
Despite these challenges, the CBUAE remains optimistic about the UAE’s long-term economic prospects. The report noted that the country’s strategic location, business-friendly environment, and strong infrastructure will continue to attract foreign investment and support economic growth.
Overall, the Central Bank’s annual report provides a positive outlook for the UAE’s economy, with the country expected to rebound next year and continue its growth trajectory in the coming years. The report highlights the country’s strong infrastructure, diversified economy, and solid fiscal position as key factors driving its economic growth, and notes that the government’s efforts to support the non-oil sector will continue to play a crucial role in the country’s economic development.
