Oil sector boom set to boost UAE’s fiscal, current account positions

Oil sector boom set to boost UAE’s fiscal, current account positions

UAE - A booming oil sector, which is set to expand at a double-digit pace this year, will drive the economic growth acceleration of the UAE in 2022, while significantly improving the country’s fiscal and current-account positions, according to economists and analysts.

A healthy non-oil sector will add further impetus thanks to the government’s reform agenda. “That said, regional tensions, volatile oil prices, and US monetary policy are key factors to watch,” economists at FocusEconomics said.

“Economic conditions appear to have been robust in H1 2022. Oil production gradually picked up throughout the first six months of the year, which, coupled with elevated prices, bodes well for public coffers and government spending. Moving into Q3, oil production rose to the highest level since April 2020 in July,” said Oliver Reynolds, Mena economist at FocusEconomics.

Moody’s said in a recent report that elevated oil prices during the next two years will lead to a significant improvement in the fiscal and external positions of the UAE and other GCC sovereigns, partly reversing their sharp deterioration in their balance sheet since 2015. The rating agency expects the UAE’s real GDP to grow by 6-7 per cent in 2022.

Moody’s expects oil prices to average around $105/barrel in