The UAE economy expanded by 8.2 per cent year over year in the first quarter of 2022, by a sharp rise in oil production and an improvement in the real non-oil GDP.
Data from the central bank’s Wednesday-released quarterly economic assessment support this.
Here, we’ll go into more information about the Central Bank and the 8.2% growth in the UAE’s GDP in the first quarter of 2022.
Key Facts
1. In 2022 and 2023, 5.4 per cent and 4.2 per cent growth in the GDP is forecast. Efforts are being taken by the government to double the production of manufacturing by 2031.
2. The decision by OPEC+ to maintain increasing output for all members led to an increase in oil production of 13% to more than 3 million barrels per day (BPD)
3. The oil GDP is forecast to expand by 8% and 5% in 2022 and 2023,
4. The first-quarter increase in non-oil GDP was 6.1 per cent.
5. It is supposed to rise to 4.3 per cent in 2022 and 3.9 per cent the following year as a result of relaxed COVID-19 regulations and an increase in foreign travel.
6. “The level of oil prices has increased due to shocks to the world’s oil supply and demand.
As per the status of the world economy, the recession lasts, and the level of geopolitical unrest,
more oil supply may be needed to stabilise the markets and promote global growth.
Federal Budget
Due to an uptick in oil output and non-oil economic activity,
federal government revenues—which make up around 14.4% of revenues—rose in the last quarter of 2021.
Given the growth in oil and gas prices and the anticipated increase in output, it is anticipated to rise further in 2022.
For 2022, the UAE set a general federal budget of AED 58.9 billion ($16 billion), of which 41.2% will go to the sector in charge of development and social benefits.
Tourism Growth
As per the data collected for ABU DHABI, there is a tremendous increment in revenue generated in Q1 2022 as compared to the last few years.
Non-Hydrocarbon Sector
According to central bank projections, the economy expanded by 6.1 per cent on a year-over-year basis during the first quarter. This expansion was due to inadequate pandemic laws, particularly those that affected travel.
In 2022 and 2023, the non-oil GDP is projected to grow by 4.3% and 3.9%, respectively.
SAUDI ARABIA is one of the most powerful producers in the oil production industry having vast spare capacity. It exports most of its food like its other adjoining countries.
Private Consumption
First-quarter domestic consumption increased as a result of rising employment and earnings. In comparison to the previous year, the number of employees and earnings both climbed by 8.1 per cent and 4.9 per cent.
In the first quarter of 2022, private sector lending rose 2.5% year over year.
The wholesale and retail trade sector saw growth of 4.5 per cent in 2021, exceeding levels from 2019 and providing hope for 2022.
Inflation
The spike in the prices of oil will have a massive effect on transportation costs and also on headline inflation. The average residential property in Dubai experienced a significant rise; it reached 11.3 per cent in the first quarter alone. The secondary sales also saw an increase of about 76%.
Since the Russian military offence has taken place in Ukraine in February there is an outburst in the oil prices.
Brent, a crucial benchmark for over 66% of global production, closed at about 140 dollars in march and has gained about 36% from the start of 2022.
As a result of market dynamics, post-Covidien effects, and the Ukraine war, the World Bank and the Monetary Fund have requested the Institute of International Finance to give their evaluation of the world economy for this year.
Some of the support factors also play a vital role in a country’s GDP.
For example, Qatar would be hosting the Fifa world cup this year which would also provide a boost to the economic sector.
The government anticipates higher revenue this year as a result of rising oil and gas prices and production capability.
As a result of the sharp increase in market interest rates, UAE banks have also experienced commendable profit margins.
UAE also saw an increment in the Consumer Price Index (CPI) of about 3.4 per cent in the first three months of 2022 as compared to 2.3 in the last four months of 2021. The UAE dirham’s top-price peg to the US dollar has an impact on inflation as well (per cent).
UAE is one of the few countries to unveil several financial and economic stimulus programs that have allowed it to make a strong recovery.
Important Contexts
The UAE economy would expand by 6.5 per cent in 2022, according to the Institute of Chartered Accountants in England and Wales (ICAEW) prediction from the previous year.
The UAE has taken steps to improve its economy’s appeal to international talent and investors in response to increased economic competition from neighbouring Gulf states.
Recommended read: A Boom of Female Founders in UAE
About Author
