UAE’s economy looking strong for 2023 says OPEC

The Organisation of the Petroleum Exporting Countries (OPEC) predicted that the UAE’s economy will continue its robust performance in 2023, after recording a growth of 7.9 percent year-on-year in 2022.

According to OPEC’s Monthly Oil Market Report for August, the non-oil sector, particularly tourism, leisure, and real estate, will continue to make significant contributions to this strong performance.

The report revealed that the country’s Global Purchasing Managers’ Index (PMI) was almost unchanged in July, standing at 56, following 56.9 in June and compared to a level of 55.5 in May. This suggests that the expansionary trend will be maintained. Meanwhile, the UAE’s real estate market remains on an upward trajectory, the report further showed, with H1’23 seeing a substantial surge in overall property transactions. This played a role in driving up residential property prices in Dubai by 16.9 percent YoY as of June, as reported by REIDIN.

Finally, the Central Bank of the UAE mirrored the 25 bps increase in interest rates implemented by the US Federal Reserve in July, putting the key-policy rate at 5.4 percent and resulting in a total rise of 525 bps in just over a year. The short-term interest rate is now approaching its highest level since before the global financial crisis.

Some of the features of the UAE’s solid economy are a strategic location, large sovereign wealth fund, strong financial reserves, progressive economic policies, consistent government spending on infrastructure, and increased foreign direct investment (FDI).

Despite recent fluctuations in oil prices and the global economic recession, the UAE enjoyed a stable economy. Its strategic location is an important feature of its credible finance growth. UAE enjoys a strategic location between Asia, Europe, and Africa. 33 per cent of the world’s population can reach the UAE within 4 hours, and 66 per cent can reach within 8 hours.

Its strong financial reserves, that aggregate capital and reserves of banks operating in the UAE, increased to AED 438.6 billion this year. According to Sovereign Wealth Fund Institute, Abu Dhabi Investment Authority is the largest sovereign wealth fund in the Middle East and the 4th largest in the world with USD 853 billion of total assets and USD 790 billion of current assets.