UAE economy survived economic impact of Covid-19: IMF official

The UAE economy has quickly survived the economic impact of the Covid-19, with near-term economic growth being strong, underpinned by a rebound in domestic activity, while elevated oil prices support high surpluses in the fiscal and external balances, according to a top IMF official.

According to the latest IMF report, UAE GDP growth is projected to reach above 6 per cent in 2022, up from 3.8 per cent last year.

With global trends, inflation is expected to average just over 5 per cent this year.

Despite the increase in oil prices and the gradual easing of Covid crisis-related fiscal support for businesses and households, fiscal surpluses have increased further.

Increased global uncertainty led to larger financial inflows, contributing to rapid real estate price growth in some segments.

“Economic growth has been robust this year, led by a strong rebound in tourism, construction, and activity related to the Dubai World Expo, as well as higher oil production in line with the OPEC+ production agreements. The economic recovery is gaining momentum driven by return of economic cycle,” Jihad Azour, director of Middle East and Central Asia Department, International Monetary Fund, told state news agency WAM.

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He added that the UAE economic outlook remains positive, supported by domestic activity.

“We expect non-hydrocarbon growth to be around 4 percent in 2023 and to accelerate over the medium-term with the implementation of ongoing reforms. Inflationary pressures are projected to moderate gradually, including from the impact of tightening financial conditions. Further development of domestic capital markets, including through the issuance of local currency debt by the federal government will also support growth.”

As to the Middle East and Central Asia, Azour said that the economic activity in the region has been resilient thus far, with multi-speed recovery continuing in 2022 and “we project that the MENA region to grow at 5 per cent this year, up from 4.1 per cent in 2021.

“However, the worsening of global conditions will weigh on the outlook for next year with growth slowing to 3.6 per cent. Growth is projected at 5.2 per cent this year for the oil exporters, with high oil prices and robust non-oil GDP growth of setting the global headwinds.”

Furthermore, he underlined the importance of stability on the monetary side, on the financial side, and with regard to inflation.

“Financial and economic stability is important to enable the investor to increase the level of the investment and the citizen to be able to have purchasing power and to maintain it.”

Read: UAE’s GDP to grow more than 6% in 2022, says IMF