The UAE Central Bank has adjusted its prediction for the country’s non-oil economic growth in 2023 to 4.5 percent, up from the previous estimate of 4.2 percent in March. The surge in the travel and tourism industry is attributed to this upward revision, while a slight decrease in inflation is expected.
According to the Quarterly Economic Review published by the banking regulator, the non-oil sector, which expanded by 7.2 percent in 2022, showed slightly slower growth in the first quarter of the current year. However, the non-oil sector is expected to gain strong momentum with the anticipated acceleration in travel and tourism, along with growth in the real estate sector and increased foreign direct investment.
The World Travel and Tourism Council projects that the travel and tourism sector will contribute approximately AED 180.6B ($49.18B) to the UAE’s economy in 2023, accounting for roughly 10 percent of the total.
Dubai, which welcomed 4.7 million tourists in the first quarter of the year, aims to surpass the pre-pandemic annual number of international visitors in 2023, as stated by Issam Kazim, CEO of the Dubai Department of Tourism and Commerce Marketing.
In addition, the UAE civil aviation sector has successfully restored passenger traffic to pre-pandemic levels, according to the Central Bank. During the first three months of 2023, the country’s airports recorded 31.8 million passengers, an increase of 11.5 million passengers compared to the same period in 2022.
Travel and Tourism Sector to Contribute 10% of UAE’s Economy in 2023
The Central Bank downgraded the overall growth forecast for 2023 by 0.6 percentage points to 3.3 percent due to the agreed oil production cuts among OPEC+ members. The Central Bank expects oil GDP growth to rebound to 3.5 percent in 2024, following a moderation to 3.1 percent in the first quarter of 2023 in line with the OPEC+ agreements.
OPEC+ members, including Saudi Arabia, the UAE, Iraq, Kuwait, Oman, and Algeria, recently announced an extension of voluntary oil production cuts until the end of 2024 due to concerns about economic growth affecting crude demand. The UAE, being OPEC’s third-largest producer, will maintain its voluntary cut of 144,000 barrels per day until December 2024.
“Performance in 2023 and 2024 is subject to the evolution of the conflict in Ukraine, a faster than expected deceleration in global growth, further Opec+ cuts or increases in oil production and subdued production of other Opec+ members,” it said.
The UAE Central Bank has maintained its gross domestic product (GDP) growth forecast for 2024 at 4.3 percent, with the non-oil economy expected to expand by 4.6 percent.
Non-oil foreign trade in the UAE reached a record Dh2.23 trillion in the previous year, with the country implementing measures to reduce its reliance on hydrocarbons and strengthen global economic partnerships. This marked the first time that the UAE’s non-oil foreign trade exceeded the Dh2 trillion mark, reflecting a more than 17 percent increase compared to the corresponding period in 2021.