Macroeconomic stability boosts UAE’s investment appeal, says finance chief

macroeconomic stability and a growth-oriented vision United Arab EmiratesChina’s leadership is boosting the country’s attractiveness as an investment destination amid global economic uncertainty, panelists told the meeting Abu Dhabi Financial Week.

Panellists said that the development of the future economy and digitalization is at the top of the agenda of policymakers in the UAE and the wider region, which has the potential to nurture and grow multiple global super apps and become home to more unicorns.

“Having a stable government contributes a lot to how people perceive ‘investability,'” Goldman Sachs International President Todd Leland told delegates in Abu Dhabi.

“You can have a global debate on investability, [but] Not all markets are as investment-worthy in 2023 as they were five years ago, or even 10 years ago. “

The ongoing economic and policy transformation in Abu Dhabi, the UAE and the Middle East is another draw for international investors, he said.

“I think the other thing is the transformation that is going on, if you look at the region in particular, and look at Abu Dhabi for a moment, the initiatives that are going on, the Vision 2030, the Entrepreneurship National Programme, the SME program…these Both are important programs to drive the economy and drive the markets that people like to invest in,” Mr Leland said.

From a global perspective, inflation, rising energy prices, geopolitical uncertainty and rising interest rates all act as headwinds, Mr Leland said.

This International Monetary Fund cut it off global growth forecast to 2023 and warned of a cost of living crisis as the world economy continues to reel from the war in Ukraine, inflationary pressures widen and China’s slowdown.

The fund kept its global economic forecast for this year at 3.2%, but lowered its forecast for next year to 2.7% – 0.2 percentage points lower than its July forecast.

The fund said earlier this month that it expects economies in the Middle East and Central Asia to grow 5% this year before decelerating to 3.6% in 2023 and 4.5% in 2021.

The oil-rich region of the Gulf Cooperation Council is expected to grow 6.9 percent this year and its economic output is expected to reach about $2 trillion by 2022, according to the World Bank.

According to the UAE Central Bank, the UAE economy rebounded strongly in 2021 and is expected to grow by 5.4% in 2022.

Emirates NBD, Dubai’s largest bank, expects the economy to grow 7% in 2022, putting the country on track for its fastest annual growth since 2011, when output rose 6.9%.

“We’ve seen a world of uncertainty”, but “it’s great to be in a much more stable place,” Mr Leland said.

“[Here] You’re going to see a region that’s going to be very different from some uncertainty around the world. “

As part of the UAE’s future economic agenda, digitization and the development of the fintech industry are top policy priorities for the UAE.

Both Abu Dhabi and Dubai have several plans and regulations in place to further advance the fintech industry and integrate the Metaverse into the UAE’s economy and society.

Over the past few years, the fintech industry “has grown significantly in developed markets”. However, Dr. Samer Haj-Yehia, chairman of Israel’s Leumi Bank, told delegates that recently, the pace of growth in emerging markets has picked up, “particularly in the Middle East, with the UAE as its cradle, being an accelerator of fintech growth”.

“We have a number of factors that keep this momentum going. We have a stable economy, one of the few economies in the world with double surpluses in the government budget and current account and growth rates above 5 percent,” he said.

A drive for innovation and digitization, a fast-growing start-up ecosystem, and a mobile-savvy young population will also help the industry in the region.

“The Middle East, and this part of the region in particular, I see as the ‘blue ocean’ for investment, especially in the financial sector,” said Dr Haj-Yehia.

“I think the Middle East is going to be the future of fintech, I expect super apps will be born from here, it’s going to be a thriving economy, and a thriving banking system.”

The region has seen unicorns emerging from the start-up ecosystem, and there is potential for more in the UAE, whether it’s banking-as-a-service, buy-now-pay-later or the cybersecurity space.

“Together, you’re going to have a lot of unicorns and super apps emerging in the region,” he said.

“So there’s no reason … not to expand all of these across the region.”

Updated: November 15, 2022 at 11:56 AM