DUBAI (Agencies): The Central Bank of UAE has projected the UAE GDP growth at 2.1 per cent for 2021 and 4.2 per cent for 2022 in its Quarterly Economic Review for the second quarter of 2022.
The subdued growth forecast for the current year is attributed to the revised decline in projected real oil GDP, based on UAE’s realised production in the first seven months of the year, OPEC+ announcements and the anticipated output schedule.
For 2022, CBUAE has revised upwards its projections to 4.2 per cent overall real GDP growth, up from 3.8 per cent previously, with the non-oil real GDP rising by 3.9 per cent.
The upward revision in GDP growth the result of the continued increase in public spending, banks’ credit outlook, higher employment and better business sentiment, as Dubai World EXPO will continue to take place in Q1 2022, the CBUAE said.
Being a major tourism, transit and trade hub in the region, the UAE is expected to benefit from the opening of travel restrictions and events such the FIFA World Cup which is planned to take place in Qatar in 2022.
Non-oil sector continued to improve in Q2 2021, benefiting from the recovery in global travel and pick up in local and global demand, while the country continued to be a leader in containing the spread of the virus. The real nonoil GDP growth forecast for the year 2021 has been kept at 3.8 per cent. The CBUAE said the residential real estate market kept improving, with prices in Abu Dhabi registering year on year gains for the second consecutive quarter in more than five years, while still declining in Dubai albeit at a slower pace.
Employment and average salary remained roughly flat during the quarter. The average UAE PMI increased by 11.3 per cent year on year in Q2, moving further up in the expansion zone to 52.2 in June.
“The improvement reflects the better sentiment boosted by the wide vaccination program and the Dubai World EXPO being only three months away,” the CBUAE report said.
Inflation remained negative in the second quarter of 2021 as the headline consumer price index declined by 0.5 per cent year on year, compared to a drop by 1.7 per cent in the previous quarter. This was the result of a decline by 0.6 per cent in the price of non-tradables, i.e. goods and services that are not traded across borders, therefore their prices are mainly determined by domestic supply and demand conditions.
Meanwhile, tradable’s prices fell by 0.3 per cent. Tradables prices, accounting for 34 per cent of the CPI consumption basket, decreased in Q2 due to the decline in most categories except transportation; and furniture and household goods.
The continued drop in the housing component prices (34 per cent weight in the consumer basket) by 3.6 per cent year on year was the main driver of the drop in price of non-tradeables during Q2.
Based on its analysis, the CBUAE projects the average CPI inflation for 2021 to remain at about -0.2 per cent and expects a move into positive territory in the second half of 2021.
In Q2 2021, outward personal remittances form UAE increased by 8.7 per cent or Dh3.6 billion year on year. There was a rise of outward remittances through banks by Dh6.1 billion, while transfers through exchange houses dropped by Dh2.5 billion.
The top five countries for outward personal remittances during the second quarter were India, Pakistan, the US, the Philippines and Egypt, accounting for 28.8 per cent, 12 per cent, 6.9 per cent, 6.2 per cent and 6.1 per cent, respectively. Outward personal remittances rose on an annual basis to all five major countries of destination.