Fast-paced diversification lowers UAE’s risk to external shocks

Fast-paced diversification lowers UAE’s risk to external shocks

Report forecasts country’s GDP growth this year at 3%

The UAE has undertaken several development projects with an investment of $23 billion in July 2022. — KT file

Published: Tue 23 May 2023, 8:11 PM

Fast-paced diversification efforts and development projects underway in the UAE play a vital role in strengthening the economy by reducing the nation’s vulnerability to external shocks, a UK-based consultancy firm said on Tuesday.

Despite key challenges posed by a decline in oil output resulting from Opec-agreed production cuts, a slowdown in the non-oil sector due to higher interest rates, and subdued external demand, the country’s real GDP will still expand at 3.0 per cent in 2023, GlobalData said in its Macroeconomic Outlook Report: UAE.

“To make the economy less vulnerable to external shocks, it remains crucial for the government to persist in its endeavour to diversify the economy,” said Indrajit Banerjee, economic research analyst at GlobalData. “Abu Dhabi’s plan to invest $2.7 billion to double the size of the manufacturing sector by 2031, and the adoption of the UAE Circular Economy Policy 2031 that focuses on manufacturing, food, green infrastructure, and sustainable transport, reflects the government’s urge to transform to a more diversified economic base,” he added.

The UAE has undertaken