Higher spending by UAE consumers are expected to boost GDP growth. Image Credit: Gulf News Archives

Dubai: The UAE is forecast to achieve an annual average real gross domestic product (GDP) growth rate of 3.8 per cent between 2019 and 2023, supported by an increase in investment flows and private consumption, according to new analysis from Dubai Chamber of Commerce and Industry.

The study identified factors such as expansionary fiscal policy and a growing number of infrastructure and construction investments in the run up to Expo 2020 as key growth drivers.

4.1%

projected growth in real GDP for UAE’s non-oil sector

A recovery in private consumption and sales of highly cyclical consumer products is expected, extending to products such as vehicles, furniture, household appliances, and medical equipment.

Meanwhile, robust growth in investment is projected on the back of government fiscal stimulus.

Real GDP for the UAE’s non-oil sector is projected grow by an average of 4.1 per cent between 2019 and 2023, compared to the 2.8 per cent accounted for in the 2014-2018 period.

Momentum behind the UAE’s GDP growth over the next 5 years will likely be led by the country’s transport and communication sector which is set to record GDP growth of 7.9 per cent, followed by construction (4.2 per cent), and real estate and business services (3.8 per cent).

Recent measures to reduce cost of doing business in the UAE are expected to support activity within the country’s SME and private sectors in the near future.

Top export markets

The trade data for the first nine months of 2018 showed that Middle East and North Africa accounts for the largest share of Dubai’s exports (41 per cent), followed by “Emerging Asia” with 26 per cent, sub-Sahara Africa (18 per cent), CIS (1 per cent) and Latin America (0.8 per cent).

Chemicals and allied products was the top-performing product category for Dubai’s exports to Asia, which includes perfumes and cosmetics, and fluorides of aluminium. Within sub-Sahara Africa and Latin America, wood pulp and paperboard was the top category for Dubai exports, while vegetable oils dominated the emirate’s exports to the CIS region.

The outlook for the global economy over the 2019-2023 period appears more modest, with real GDP growth projected to reach an average of 3.6 per cent, according to recent projections from the IMF. Tightening fiscal policy, higher borrowing costs, and US-China trade tensions, are among the main factors expected to impact economic growth in the medium term.

On the other hand, emerging markets are expected to see average real GDP growth of 4.8 per ccnet between 2019 and 2023, outperforming advanced economies and the global average.