UAE economy to grow faster next year: IMF – News

Last year’s growth rate improved from 5.1% to 7.4%

The International Monetary Fund (IMF) forecast on Tuesday that the UAE’s economy will expand at a faster pace next year, slightly lowering its outlook for global growth amid uncertainty in the global financial system.

It expects the UAE’s GDP to grow by 3.9%, compared with 3.5% this year.

However, it lowered the UAE’s growth forecast for 2023 by 0.7% to 3.5%, based on the global economy. But in its latest World Economic Outlook report on Tuesday, it raised last year’s growth rate to 7.4% from 5.1% in October 2022.

The UAE Central Bank also expects a real GDP growth rate of 3.9% for the local economy in 2023. It expects oil GDP to grow by 3.0% in 2023 and 3.5% in 2024, depending on the evolution of the conflict in Ukraine, a faster-than-expected deceleration in global economic growth, further cuts in oil production by OPEC+, and other OPEC members Production may be cut.

The World Bank forecasts real GDP growth rates of 3.6% and 3.4% in 2023 and 2024, respectively.

Economists say the UAE and other oil-producing Gulf economies will slow this year due to output cuts announced this month for 2023 and a cooling economy after a sharp rebound in 2021-22 as Covid-induced restrictions are imposed by the UAE and the world. Governments everywhere relax.

Among other regional economies, Saudi Arabia, Qatar, Kuwait and Oman are expected to grow by 3.1%, 2.4%, 0.9% and 1.7% respectively, implying that the UAE will be the fastest growing economy in the Gulf Cooperation Council ( GCC) region.

Soft landing for the global economy?

Meanwhile, the International Monetary Fund said the global economy was once again at a time of high uncertainty, forecasting growth to slow to 2.8% in 2023 from 3.4% in 2022.

Updated IMF economic growth forecasts for world regions. – AFP/AFP

However, amid persistently high inflation and recent financial sector turmoil, the first signs of a possible soft landing for the world economy in early 2023—with subdued inflation and steady growth—have faded.

It warned that problems in the financial system caused by U.S. bank failures could cut output to near recessionary levels.

“While inflation has eased as central banks raised interest rates and food and energy prices fell, underlying price pressures proved to remain, with labor markets tightening in many economies,” it said.

The slowdown in growth is expected to be particularly pronounced in advanced economies, falling from 2.7% in 2022 to 1.3% in 2023.

Among Asia’s other major economies, it forecast growth of 5.9 percent for India this year, 5.2 percent for China and 1.3 percent for Japan.

The economies of the US, Canada and France are expected to grow by 1.6%, 1.5% and 0.7%, respectively.

The U.S. outlook improved slightly as the labor market remained strong.

The UK and Germany will contract by -0.3% and -0.1%, respectively. That would make Britain the worst-performing economy among the G7 countries this year.

“While inflation has eased as central banks raised interest rates and food and energy prices fell, underlying price pressures proved to remain, with labor markets tightening in many economies,” it said.