According to new research from Global Data, the UAE's economic development prospects for 2023 face significant challenges, including a reduction in oil output owing to OPEC-agreed production restrictions, a slowdown in the non-oil sector due to rising interest rates, and weak external demand.
UAE’s real GDP statistics in 2023
According to Global Data, a prominent data and analytics business, the UAE's real GDP is expected to increase at a slower rate of 3% in 2023, compared to the 7.6% growth rate seen in 2022.
Global Data's latest report details
According to GlobalData's latest study, 'Macroeconomic Outlook Study: UAE,' the oil and gas sector plays an important part in the UAE's economy, accounting for around 30% of the country's GDP and 13% of total exports. The year 2022 saw a substantial economic upturn, with a 7.6% growth rate, the highest since 2007, powered mostly by rising oil and gas prices. However, the drop in oil and gas prices since the beginning of 2023, which is likely to continue over the year, has a direct influence on the UAE's economic development expectations for this year.
In order to make the economy less dependent on external shocks, it remains critical for the government to keep going in its effort to expand the diversity of the economy. Abu Dhabi's commitment of 2.7 billion dollars to increase the scope of the manufacturing sector by 2031, as well as the adoption of the UAE Circular Economy Policy 2031, concentrating on manufacturing, food, green infrastructure, and environmentally friendly transport, reflect the government's desire to diversify its economic base," says Indrajit Banerjee, economic research analyst at Global Data.
UAE project plans for 2023–25
The UAE has committed to many development projects totaling $23 billion by July 2022, with the goal of considerably increasing construction and related activity and creating employment opportunities. Some of the continuing projects include the $11 billion railway network project overseen by Etihad Rail by 2024, the creation of the Dubai urban tech district by 2024, and the increase in the power output of the Rashid solar park by 2025. These projects are expected to stimulate construction activity, which Global Data predicts will increase by 2% on average between 2023 and 2025.
Banerjee added: "While the UAE's economic growth outlook for 2023 experiences challenges, ongoing diversification efforts and development projects aimed at improving the economy will play a critical role in decreasing its sensitivity to external shocks".
