UAE economy expected to grow by over 5 percent this year: UBS

Michael Bolliger, Chief Investment Officer Emerging Markets at UBS Global Wealth Management, has stated that he expects the UAE’s economy to grow by over five percent in 2022.

In an interview with the Emirates News Agency (WAM), Bollinger said that the UAE’s economy grew by 3.8 per cent in 2021, due to appropriate government incentives and plans and the vaccination of all citizens and residents, noting that the growth of the non-oil sector also played a significant role in this economic recovery.

All indexes, including the Purchasing Managers Index (PMI) and Business Confidence Index (BCI), showed that the growth of the non-oil sector is still robust after a good start to the year, as the country’s GDP grew by 8.2 percent in the first quarter of 2022 while oil-related GDP grew by 13 per cent, in line with relevant Opec+ agreements, he added.

The increase of the UAE’s real income levels, as a result of rising wages and employment rates, helped support local demand and, therefore, strengthened the country’s wholesale, retail and real estate sectors, he further added.

The transport, tourism and hospitality sectors also achieved solid recoveries in the past period, with the rise in the numbers of tourists and hotel occupancy rates, Bollinger said, noting that the rapid recovery from the COVID-19 pandemic and the significant contributions of non-oil sectors, highlight the UAE’s economic diversification.

The Gulf Cooperation Council (GCC) economies will grow by 6.4 percent in 2022 and 3.4 percent in 2023, he stressed. The global economy has entered a downward trend due to rising concerns of a recession and the US’s GDP decreased by 0.9 percent in the second quarter of 2022 while concerns of a recession in Europe are rising, he noted.

Inflation is still a major worry for monetary policy-makers worldwide and the current inflation dynamics do not leave much room for less restrictive policies by central banks. “We believe that the US Federal Reserve will continue raising interest rates to reach 100 basis points by the end of 2022,” he said in conclusion.

Private sector employees: The number of UAE-based private sector employees increased by nine percent in Q2, 2022, compared to the same period last year, the Ministry of Human Resources and Emiratisation (MoHRE) said on Wednesday in its private sector workforce report.

The number of private sector employees registered in MoHRE’s database by the end of Q2 totalled 5,376,842, it added.

Khalil Al Khoori, Acting Under-Secretary for Human Resources Affairs at MoHRE, said, “The increase in the private sector workforce is aligned to the remarkable growth of the UAE’s economy. This is also in line with the government’s policies and strategic initiatives that reinforce the nation’s status and active role in the international economic ecosystem, which is also highlighted by numerous reports by international economic organisations.”

He noted that the results reaffirm the competitiveness of the UAE’s job market, “which nurtures a wealth of human resources capable of supporting the national economic diversification drive in line with the strategic growth plans.”

“The increase in the total private sector workforce reflects the UAE’s job market’s attractiveness as a global destination for capabilities and expertise. We’ll keep enhancing the legislative framework of the job market with a focus on protecting the rights of employees and employers alike,” he said.

The report revealed that MoHRE issued 537,974 new work permits during Q2, 2022, an increase of 27 percent over Q2, 2021. On the other hand, in Q2, 2022, there was an eight percent decrease in the cancellation of work permits, compared to Q1, 2021, amounting to 301,569 cancelled permits.

The report’s findings also showed that the construction sector accounted for the largest chunk of new work permits issued by MoHRE during Q2, 2022, followed by the business services sector, the trade and repair services sector, the manufacturing sector and the hotels and restaurants sector.

Twenty-six percent of the total private sector workforce registered with MoHRE are in the construction sector, followed by 21 percent in the trade and repair services sector, and 19 percent in the business services sector.

In comparison with the results of Q2, 2021, the agriculture sector marked the largest growth in the number of new work permits issued at an increase of 70 percent, followed by social and personal services at a growth rate of 62 percent, the business services sector at 44 percent and the financial services sector at 43 percent.

Meanwhile,  a report by the Department of Municipality and Planning in Ajman revealed that the value of construction contracts in the emirate exceeded Dhs2.1 billion in the first half of 2022, higher than during the same period in the two previous years.

WAM