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UAE's central bank expects the country's real total GDP to grow at a stronger pace by 4.2 percent and non-hydrocarbon real GDP to increase by 3.9 percent in 2022.
"However, economic projections are susceptible to uncertainties amidst COVID-19 repercussions," the central bank said in a quarterly economic review.
The various factors that could potentially contribute to the GDP include the continuous increase in public spending, positive outlook for credit growth, higher employment and better business sentiment, as Expo 2020 Dubai will continue to take place in Q1 2022.
Furthermore, being a major tourism, transit and trade hub in the region, the UAE is expected to benefit from the removal of travel restrictions and events such as the FIFA World Cup, which is planned to take place in Qatar in Q4 2022, according to the central bank.
Annual real GDP growth rates in the UAE
Source: FCSC for 2019 and 2020 and CBUAE projections for 2021 and 2022.
The oil sector's GDP growth projection for 2022 has not been changed and remains at 5.0%.
Both, non-oil and oil GDP projections for 2022 are subject to upside risks, if global economies, trade and travel reach the full recovery point faster than expected, while downside risks are related to uncertainties around new variants and vaccination rates globally, the apex bank said in the quarterly review.
The emergence of the Omicron variant has prompted many GCC states to re-introduce mask mandates and social distancing.
On Wednesday, the UAE announced 2,708 new coronavirus cases, a sharp rise from below 100 cases less than a month ago.
According to London-based Capital Economics If outbreaks do worsen then restrictions could be tightened further, which would pose a greater risk to recoveries in Egypt and the UAE where international tourism is more important.
(Reporting by Seban Scaria; editing by Anoop Menon)
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