Growth supported by higher oil prices, recovery in the non-oil sector
The UAE’s economic growth will accelerate this year compared to 2021 and will grow 4.6 percent in 2022, compared to 2.6 percent in 2021.
The UAE will benefit from higher oil prices and a strong recovery in the non-oil sector, the World Bank said in its latest report released Tuesday.
The World Bank’s growth forecast is higher than the UAE Central Bank’s forecast of 4.2 percent growth for 2022.
The central bank is forecasting growth of five percent for the oil sector and 3.9 percent for the non-oil sector.
The International Monetary Fund had previously forecast that the UAE’s economy would grow by more than three percent this year and will be around the same level by 2026.
In addition to higher oil prices, non-oil sectors such as travel and tourism, real estate, hospitality, aviation and manufacturing have also performed better in 2021, particularly since the start of Expo 2020 Dubai, which has been a major driver of the country’s economic growth in recent years Quarter.
Oil prices rose steadily for most of last year, rising from $ 53 a barrel on Jan. 12, 2021 to $ 82 a barrel on Tuesday. Prices rose on Tuesday due to the tight supply and hope the Omicron variant of the coronavirus won’t wipe out the global economic recovery.
The World Bank forecast that the UAE’s economy would grow at a slower pace of 2.9 percent over the next year, in line with the slowdown in regional economic growth.
The study “Global Economic Prospects” predicted that all other UAE economies bordering the Gulf would experience an acceleration in GDP growth this year, led by 5.3 percent in Kuwait, 4.9 percent in Saudi Arabia, 4, 8 percent in Qatar and 3.4 percent cents in Oman. Bahrain is the only exception where GDP growth will slow slightly to 3.2 percent in 2022.
“As high-contact sectors rebound and oil production cuts abate, supported by the tailwind of a generally accommodative political environment, growth in the Middle East and North Africa (Mena) is expected to accelerate to 4.4 percent in 2022, an upward revision from June 2021.” and moderate to 3.4 percent in 2023. However, the gap in average per capita income between Mena and the advanced economies is expected to widen over the forecast period, ”said the World Bank.
The Mena region saw a strong economic recovery in the second half of 2021, bringing production back to pre-pandemic levels in some economies. Economic performance has been mixed across the region due to differences in the severity and impact of the pandemic.
Global growth is expected to slow down
The World Bank said the global economy is entering a marked slowdown amid new threats from Covid-19 variants and an increase in inflation, debt and income inequality that could jeopardize the recovery in emerging and developing countries.
Global growth is expected to slow significantly from 5.5 percent in 2021 to 4.1 percent in 2022 and 3.2 percent in 2023 as the pent-up demand and fiscal and monetary policy support are reduced worldwide.
Growth in the advanced economies is projected to decline from 5 percent in 2021 to 3.8 percent in 2022 and 2.3 percent in 2023. In the emerging and developing countries, on the other hand, a decline from 6.3 percent in 2021 to 4.6 percent in 2022 and 4.4 percent in 2023 is expected.
“The decisions that policymakers will make over the next few years will determine the course of the next decade. The immediate priority should be to ensure that vaccines are used more widely and more equitably so that the pandemic can be brought under control … Debt, global cooperation is essential to expand the financial resources of developing countries for green, resilient and inclusive development “said Mari Pangestu, director of development policy and partnerships at the World Bank.