UAE skyline
A rise in the UAE’s oil exports will significantly contribute to growth. Image Credit: Pexels

The UAE’s gross domestic product (GDP) is expected to grow by 4.1 per cent in 2023, a senior World Bank official said.

The forecast is higher than the 3.9 per cent anticipated by the UAE Central Bank in its recent Quarterly Economic Review.

Essam Abu Suleiman, World Bank Regional Director for the GCC, said in an interview to WAM: “Despite the difficult global economic conditions, our estimates suggest that the UAE economy will grow by about 4.1 per cent next year, benefiting greatly from the strong recovery of the non-oil economy.”

According to him, a robust economic growth is expected to be supported by a rise in the UAE’s oil exports and a recovery in non-oil sector demand, as well as the country’s favourable business climate and well-developed infrastructure.

Abu Suleiman said UAE’s revenues will also increase as oil income rises and non-oil sectors recover, resulting in a fiscal surplus of about 4.4 per cent of GDP in 2022. He also noted that the recent bilateral free-trade agreements the UAE has signed, along with the strength of oil exports, are expected to produce a current account surplus of 11.2 per cent of GDP.

Earlier this month, the UAE Central Bank, in its latest Quarterly Economic Review, said the country’s GDP would grow 7.6 per cent this year, an upward revision of more than a percentage point from 6.5 per cent earlier.

The Central Bank attributed the increase in growth forecast to the strong performance of some non-oil sectors, including tourism, hospitality, real estate, transportation and manufacturing.

The regulator expected non-oil GDP to grow by 6.1 per cent in 2022, compared to 4.3 per cent in its previous estimates, while the oil GDP is expected to grow by 11 per cent in 2022.

The report also noted that while advanced and emerging economies will witness slow growth in 2023, growth prospects will be different for the GCC.

“The global economy is experiencing sharper-than-expected slowdown in 2022 and this trend is envisaged to continue in 2023. Risks such as higher inflation worldwide, continued tightening of global financial conditions, and uncertainties related to the conflict in Ukraine continue to intensify the global slowdown,” the report said.

The GCC countries, however, have seen an upward revision of growth.

“Growth prospects are different in the GCC, where the outlook has been revised upward for all countries. Real GDP growth is expected to peak in 2022, with Kuwait and Saudi Arabia GDPs expected to increase by 8.7 per cent and 7.6 per cent, respectively,” the Central Bank said.