Abu Dhabi, UAE — The World Bank in its new Gulf Economic Update has hailed the UAE’s “favourable business environment and world-class infrastructure”, expecting the country’s real GDP to grow by 5.9 percent in 2022.
The global financial institution said higher oil receipts supplemented with a gradual non-oil recovery in the Emirates will bolster fiscal revenue resulting in a fiscal surplus to hover around 4.4 percent of GDP in 2022.
Recent bilateral free trade agreements with Asian partners supported by strong oil exports will place the UAE’s current account surplus at 11.2 percent of GDP in 2022, according to the report.
However, the bank expected the real GDP to moderate to 4.1 percent in 2023 as slower global demand may dampen growth due to tightening financial conditions.
According to the GEU, the economies of the Gulf Cooperation Council (GCC) are projected to expand by 6.9 percent in 2022 before moderating to 3.7 percent and 2.4 percent in 2023 and 2024 respectively.
“Easing of pandemic restrictions, and positive developments in the hydrocarbon market drove strong recoveries in 2021 and 2022 across the GCC,” the report said. “Strong economic recovery and supply chain bottlenecks raised inflation in the GCC to an average rate of 2.1 percent in 2021 — up from 0.8 percent in 2020.”
Supported by higher hydrocarbon prices, the report continued, the GCC region is “expected to register strong twin surpluses in 2022 and continue over the medium term”.
“The regional fiscal balance is projected to register a surplus of 5.3 percent of GDP in 2022 – the first surplus since 2014 — while the external balance surplus is expected to reach 17.2 percent of GDP,” the report added.
The GCC countries’ total GDP, according to the report, is projected to be close to US$ 2 trillion in 2022.
“If the GCC continued business as usual, their combined GDP would grow to an expected US$ 6 trillion by 2050,” the report predicted. “However, if the GCC countries implemented a green growth strategy that would help and accelerate their economic diversification, GDP could have the potential to grow to over US$ 13 trillion by 2050.”
World Bank Regional Director for the GCC, Issam Abousleiman said it was “an excellent and timely opportunity to diversify the economy further using a green growth strategy, and playing a leading role in the global transition to low-carbon economies.”
The region, he continued, could use the green growth transition to focus policies on developing green technologies and associated skilled labor that would reverse trends in productivity and enable the region to grow faster.