The United Arab Emirates (UAE) experienced significant economic growth in 2021, with a 7.6% expansion, twice as much as the previous year. The country’s rebound from the COVID-19 pandemic was supported by higher energy prices, which stimulated economic growth across the Gulf region’s oil exporters. However, economic slowdown is expected this year, given the uncertain oil price outlook and a challenging global macroeconomic environment.
The UAE aims to diversify its economy away from hydrocarbons and double its size by 2031. According to the UAE Minister of Economy, Abdulla bin Touq Al Marri, achieving a 7% GDP growth rate annually is necessary to achieve this goal. He cited various strategies that the UAE has put in place, such as trade agreements, openness to trade, and investment in the energy transition, particularly in green hydrogen.
In 2022, the UAE’s foreign trade amounted to 2.2 trillion dirhams ($599 billion), a 17% increase year on year. The country signed bilateral trade agreements with India, Israel, Indonesia, and others, with ongoing talks with Turkey. Additionally, the UAE is set to host the UN’s flagship COP28 climate conference at the end of the year.
Al Marri emphasized the need for agility in the UAE’s strategy, given the challenges that could affect the economy faster. He stated that solutions should come from the private sector and not just the government, as they have a lot of potential solutions to address these challenges.
Moreover, he highlighted the role of the Chinese economy’s reopening in reducing inflation worldwide, especially on goods and products coming from China, which is one of the UAE’s biggest trade partners.
The UAE’s robust economic growth in 2021 has spurred its goal to diversify the economy away from hydrocarbons and double its size by 2031. The country has put in place various strategies, such as trade agreements, investment in the energy transition, and openness to trade, to achieve this goal. However, given the challenging global macroeconomic environment, agility is essential in the UAE’s strategy, with solutions coming from both the government and the private sector.