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Oil prices rise as ongoing Russia-Ukraine military crisis, higher forecast
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The International Monetary Fund (IMF) has raised the UAE’s economic growth forecast for 2022 and 2023 in its latest report as fears of a world recession intensify.
According to the World Economic Outlook report released by the International Monetary Fund on Wednesday, the UAE’s gross domestic product (GDP) is expected to grow by 5.1% this year, compared with a previous forecast of 4.2%. This would be the highest growth in the past seven years.
Meanwhile, the forecast for 2023 has been revised up to 4.2% from a previous forecast of 3.8%, in line with central bank data.
Earlier, the UAE Central Bank reported that the UAE’s gross domestic product grew by 8.4% in the first quarter of this year, the highest level in the past decade, due to higher oil prices and measures to reduce the impact of the Covid-19 pandemic. measures.
On September 28, Dubai’s largest bank, UAE NBD, also raised its 2022 growth forecast for the UAE to 7.0% from 5.7% previously. But the deteriorating global economic backdrop, higher interest rates and a stronger dollar led Emirates NBD Research to downgrade its 2023 growth forecast for the UAE to 3.9% from 5.7% previously.
The higher forecast by the IMF and UAE NBD comes against the backdrop of rising oil prices – which have remained at 10 per cent for most of the year due to the Russian-Ukrainian military crisis that erupted on 24 February 2022. Barrels above $100.
The UAE government approved a balanced budget of $69.69 billion for 2023-26 due to higher oil prices, supporting the IMF’s higher growth forecast.
Importantly, the International Monetary Fund warned Wednesday that the worst is yet to come, and for many countries, “2023 will feel like a recession.”
The International Energy Agency also said on Thursday that high oil prices after OPEC+ production cuts could push the global economy into recession.
On Wednesday, the International Monetary Fund downgraded its growth forecast for next year to 2.7% from 2.9%, but kept growth this year unchanged at 3.2%. That outlook has worsened since the start of the year.
The United Nations Global Financial Institution expects inflation in the UAE to be 5.2 percent this year, a sharp increase from 0.2 percent last year. Inflation is expected to slow to 3.6% next year.
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