Economic Growth Forecast for 2023
The Central Bank of the UAE has released a report forecasting a slowdown in the UAE’s economy in 2023. While the country’s GDP will still grow at a steady rate of around five percent, this number is considerably lower than the seven-point six percent growth rate projected for 2022.
The main reasons for this slowdown are global recession and geopolitical tension. The former has already begun to affect economies around the world, while the latter is likely to continue to be a problem in the coming years.
Despite these challenges, the UAE is still expected to post positive growth in the years to come. This makes it one of the most stable economies in the region and makes it well-positioned to withstand any future shocks.
How the UAE Is Responding to Global Recession and Geopolitical Tensions
The UAE is a strong and resilient economy, and we are taking the necessary steps to protect our citizens and businesses from the negative effects of global recession and geopolitical tension.
In the quarterly review report for the third quarter of this year, the Central Bank of the UAE revised real output growth for 2023 to 3.9 percent. While this is lower than the 7.6 per cent projected by the central bank for 2022, it is still a healthy growth rate that shows our economy is on track.
We are confident that by taking these measures we will be able to continue to grow our economy and provide opportunities for our citizens and businesses.
Economic Sectors Most Affected by the Economic Slowdown
A number of economic sectors are likely to be affected by the expected economic slowdown in 2023, including construction, banking, tourism and hospitality. Construction sector activity is projected to decelerate as many investors look to delay investments while they wait out the global recession. This could result in a deflationary impact on overall economic growth. The banking sector faces pressure from rising loan defaults as businesses struggle with a drop in revenues and rising unemployment levels. Tourism and hospitality losses remain significant as panic around the pandemic leads to more people staying at home, resulting in a massive fall in travel and leisure spending.
Though these sectors will take the brunt of the slowdown, the UAE is implementing policies to protect smaller businesses while encouraging increased investment in strategic sectors such as healthcare, technology and renewable energy. These measures are likely to limit any long-term damage caused by the downturn and position them for strong growth once the economy begins to recover.
Conclusion
The UAE’s economy will experience a slowdown in 2023 because of global recession and geopolitical tension but it will remain on track to post a steady gross domestic product (GDP) of around five per cent.
