The central bank has maintained its growth forecast for the UAE unchanged at 4.3 percent for 2024.
In its Quarterly Economic Review, the apex bank said the UAE economy continued to grow at a solid pace in Q1 2023, “reflecting a strong performance of the non-oil sector, partially offset by a moderation in the oil segment of the economy.
The central bank, however, revised down its growth forecast for this year by 0.6 percent to 3.3 percent, reflecting oil production cuts agreed among OPEC+ members.
The non-oil sector is expected to continue to support aggregate output, “albeit at a more modest pace compared to 2022, ” the review said.
UAE’s oil GDP growth in Q1 2023 is estimated to have moderated to 3.1 percent on a year-on-year basis, after growing at 9.5 percent in 2022, on account of the OPEC+ agreements.
Starting in May 2023, OPEC decided to cut production by 144,000 barrels per day for the UAE. This resulted in a downward revision of the expected GDP growth for 2023 to -0.3 percent, corresponding to an average daily output of 2,950 thousand barrels per day.
The apex bank projected the other hydrocarbon products, such as natural gas liquids (NGL) that are not covered by the OPEC+ production agreements but contribute to oil GDP, to continue to grow at a strong pace in 2023.
It also forecasts oil GDP growth to rebound to 3.5 percent in 2024.
“Performance in 2023 and 2024 is subject to the evolution of the conflict in Ukraine, a faster than expected deceleration in global growth, further OPEC+ cuts or increases in oil production, and subdued production of other OPEC+ members,” the review said.
Positive economic outlook for the UAE
On UAE government investment and consumption in 2022, the report indicated that the consolidated fiscal balance recorded a surplus of AED195.7 billion – or 10.5 percent of the GDP – up from 4.5 percent in 2021.
Domestic consumption also performed well during Q1 2023, supported by the significant rise in employment.
The 3-month moving average of people employed in the UAE and wages paid in the private sector recorded a double digit increase Y-o-Y in Q1 2023, with levels and growth higher than their pre-Covid levels.
The banking sector continued to support investment in the private sector, as credit to the private sector increased by 5.9 percent Y-o-Y in Q1 2023, the review said.
Follow us on
