The UAE’s economic growth outlook for 2023 faces challenges but the ongoing diversification efforts and development projects will play a vital role in reducing its vulnerability to external shocks, said London-based data and analytics firm GlobalData.

Abu Dhabi’s plan to invest $2.7 billion to double the size of the manufacturing sector by 2031, and the adoption of UAE Circular Economy Policy 2031, which focuses on manufacturing, food, green infrastructure, and sustainable transport, reflects the government’s urge to transform to a more diversified economic base, said Indrajit Banerjee, Economic Research Analyst at GlobalData.  

In its “Macroeconomic Outlook Report: UAE”, the consultancy said that the real GDP of the UAE is forecast to expand at a slower pace of 3% in 2023, compared to 7.6% in 2022, due to a decline in oil output, a slowdown in the non-oil sector due to higher interest rates, and subdued external demand.

The decline in oil and gas prices since the beginning of 2023 is expected to persist throughout the year, directly impacting the country's economic growth prospects.  

Export growth is projected to slow down from 4% in 2022 to 2.6% in 2023, while real household consumption expenditure is likely to grow slower at 4% this year from 8.4% in 2022, the report said.

(Edited by Brinda Darasha;