Economic growth will increase to 6.5% in 2022 after growth of 1.7% in 2021
The UAE economy will grow by 6.5 percent in 2022, meaning it will reach its pre-pandemic level in the first quarter, according to forecasts by the ICAEW.
Higher oil output, loosening of the COVID-19 restrictions and the start of Expo 2020 Dubai are driving recovery, with the economy growing by 1.7 percent this year, according to the chartered accountants’ professional body.
Following the OPEC+ easing of production limits, the ICAEW forecasts a significant oil production increase in 2022, with the UAE benefitting from its production baseline being raised to over 3.5 million barrels from May 2022, from just under 3.2 million.
“The rise in oil output will be critical to boosting UAE GDP growth in 2022 and should remain an important driver of growth over the next decade as ADNOC aims to raise output to 5m b/d by 2030,” the forecast said.
The travel and tourism sector, which accounts for about 16 percent of GDP in the UAE, is benefitting from the improvement of economic conditions, with hotel occupancy rates in Dubai rising above 80 percent, a three-year high, the report said, adding that although Expo visits are expected to be lower than the 25 million anticipated by organisers, numbers will continue to rise.
Private labour law reforms, giving additional protection to workers as well as flexible work and new Dubai five-year multiple entry visas for international companies residing in the emirate will also increase competitiveness the ICAEW said.
Michael Armstrong, ICAEW regional director for the Middle East, Africa and South Asia, said the UAE’s strong fiscal position means it is also well placed to support a clean energy transition in line with its plan to implement net-zero emissions by 2050.
“This will open up a world of opportunities for industries to make use of clean energy and technologies to drive sustainable growth,” he said.
The UAE inflation rate turned positive in Q3 this year for the first time since 2018, due to rises in the price of transport, recreation and culture, and the cost of education.
However, ICAEW forecasts inflation averaging -0.3 percent this year before rising to 1.5 percent in 2022, still the lowest in the GCC region.
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