UAE economy set to remain on growth path

The Organisation of the Petroleum Exporting Countries (Opec) has confirmed that the UAE’s economy grew by 3.8 per cent in the first quarter of 2023.

In its September 2023 report, Opec said it expects the UAE’s economic expansion to continue, noting that key sectors of the country’s economy have seen significant growth.

The OPEC report highlighted that the most prominent sectors with significant growth were transportation and storage (10.9 percent), construction (9.2 percent), and accommodation and food services (7.8 per cent).

The report also noted that the travel and tourism sector in the UAE is playing an important role in driving economic growth. In the first half of 2023, the number of passengers at Dubai International Airport and international visitors to Dubai exceeded pre-pandemic levels.

According to the Opec report, the number of international visitors to the UAE is expected to increase by nearly 40 percent in 2023, according to Oxford Economics. This would exceed the 2019 level by 17 percent.

The report also stated that the Central Bank of the UAE has mirrored the interest rate policy of the US Federal Reserve, keeping the key interest rate unchanged at 5.4 percent.

Standard & Poor’s: Standard & Poor’s Global Ratings expects that the banks of the United Arab Emirates (UAE) will achieve strong performance in 2023. In a recent report, the credit rating agency said that UAE banks will benefit from strong non-oil GDP growth, which will mitigate the impact of rising interest rates on credit growth.

The report expects bank credit growth at UAE banks to rise to about 7 per cent in 2023, from 5 percent in 2022.

The report stated that the performance of UAE banks improved in the first half of this year due to the rise in interest rates, with high-interest rates expected to continue to support banks’ profitability.

The report believes that the non-oil economy in the UAE is still providing sufficient support to help reduce the increase in loans that are classified as “non-productive.” In addition, banks’ reserve allocations over the past two years will help them withstand challenges.

According to the report, bank financing will continue to benefit from their strong success in collecting deposits. Banks have collected local deposits over the past 18 months.

Overall, Standard & Poor’s expects an improvement in bank returns in the Gulf Cooperation Council (GCC) countries in 2023, due to higher profit margins and continued lending growth.

Meanwhile, Dubai International Chamber, one of the three chambers operating under the umbrella of Dubai Chambers, has inaugurated a new representative office in Paris to boost trade and investment with France. The launch comes just days after the inauguration of the chamber’s new office in Italy, further strengthening its presence in Europe and increasing the total number of international representative offices to 24 across five continents.

The opening comes as part of the ‘Dubai Global’ initiative, which seeks to attract new business, investment, and talent to the emirate while enabling Dubai-based companies to expand into priority international markets. Launched by H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council of Dubai, Dubai Global aims to establish a powerful network of 50 representative offices around the world by 2030.

The inauguration ceremony for the new office was held with the participation of Her Excellency Hend Al Otaiba, the UAE Ambassador to France, and Salem Al Shamsi, Vice President of Global Markets at Dubai Chambers, in the presence of distinguished representatives of the French business community.Commenting on the launch of the Paris office, Mohammad Ali Rashed Lootah, President and CEO of Dubai Chambers, said: “France is one of the strategically important global markets in which we are keen to establish our presence. Our network of international representative offices will play a key role in boosting Dubai’s non-oil foreign trade from AED 1.4 trillion to AED 2 trillion by 2026, in line with the goals of the emirate’s five-year foreign trade plan.”

Lootah added: “We remain committed to achieving our strategic priorities and strengthening our efforts to attract companies from France and the wider European region to Dubai, as well as assisting Dubai-based companies that wish to expand into France. The new office in Paris unifies our efforts to enhance the reach and resilience of Dubai businesses in global markets while supporting the Dubai Economic Agenda by attracting new foreign direct investment to the emirate.”

Hend Al Otaiba, the UAE Ambassador to France, commented: “Dubai International Chamber’s opening of a new Paris office is testament to the strength and dynamism of France-UAE trade relations. This milestone comes at a crucial moment in time as our economy is diversifying at full speed, presenting exciting new opportunities for French companies to expand their footprint in the UAE in fields varying from space and technology to health and luxury.”

472 French companies registered with Dubai Chamber of Commerce during the first seven months of 2023 alone, up 33% from the same period in 2022. This impressive growth brought the total number of member companies from France to 3,068, underlining the strong level of interest in Dubai among the French business community.

The value of non-oil bilateral trade between Dubai and France reached AED 24.6 billion during 2022, representing significant year-on-year growth of 33.7%.

WAM