UAE skyline
Further oil output will steer the strong gains made by the UAE economy. Image Credit: Suji Su/Pexels

Dubai: The UAE economy is forecast to grow 4.2 per cent in 2022, according to the latest projections by International Monetary Fund (IMF), which is in line with the UAE Central Bank’s forecasts.

High oil prices and the UAE’s potential to increase output gives the country room for further upward revision of growth outlook. Given the UAE is among the few countries with spare oil capacity, a surge in output is predicted over the next two years as it gradually raises production in response to pressure from consuming countries to ratchet up supplies.

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The strong growth outlook for the UAE comes amidst concerns about bleak prospects for most of the developed and emerging economies facing inflationary pressures and rising costs from higher interest rates. Global growth is projected to slow from an estimated 6.1 per cent in 2021 to 3.6 per cent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than in the January 2022 World Economic Outlook update.

The IMF’s ‘World Economic Outlook’ report revised the UAE GDP growth in 2021 to 2.3 per cent from the earlier 2.1 per cent forecast. In 2023, it expects the UAE economy to grow by 3.8 per cent and maintain an average growth of 4.2 per cent between 2022-27.

GCC outlook

The IMF said the growth outlook of GCC countries have significantly benefitted from higher oil and gas prices. The 2022 forecast for Saudi Arabia is revised up 2.8 percentage points, reflecting higher oil production in line with the OPEC+ agreement, reinforced by stronger than anticipated growth in the non-oil sector.

While Kuwait’s 2022 growth outlook of 8.8 per cent gets a significant boost from high oil prices, Oman and Bahrain are projected to grow by 5.6 per cent and 3.3 per cent. Overall, GDP in the Middle East and Central Asia is expected to grow by 4.6 per cent in 2022.