UAE: Oil Rebound and Economic Growth

UAE: Oil Rebound and Economic Growth

As reported previously, the Gulf countries are showing encouraging signs of economic recovery. While the economic diversification drive has helped a significant number of innovative companies active in non-oil sectors to emerge in recent years and grow stronger during the coronavirus pandemic, the oil sector has also contributed to the economic rebound of the Gulf region. This was confirmed by a recent report published by Bloomberg, which indicates that the United Arab Emirates is expected to see an oil rebound boost its economic growth to 4.2 percent in 2022. 

The oil sector was dealt a severe blow during the covid-19 pandemic. During the first months of 2020, oil prices worldwide collapsed to historic lows with some stocks losing two-thirds of their value on the markets, before witnessing a long overdue rebound in 2021. And the upward trend is likely to be confirmed in 2022.

According to recent data released by the UAE Central Bank and reported by Bloomberg, the contribution of the oil sector to the country's GDP is set to grow by 5 percent while that of the non-oil sector is expected to remain stable. According to projections by the International Monetary Fund, the country’s economy is expected to grow by 3 percent in 2022. Similar levels of growth are expected into 2026.

These preliminary data, while encouraging, represent projections, which may be subject to change owing to the possible repercussions of the coronavirus pandemic in the coming months. 

However, economic diversification to alleviate an excessive economic dependence on the oil sector remains one of the essential pillars of the Gulf countries’ economic visions, as unveiled over the past decade, which showed the national governments’ commitment to continuing to invest in innovative projects and disruptive sectors that are likely to become the key drivers of tomorrow’s world economy.