UAE Economy Minister shares vision for economic openness in 2023 and beyond
The UAE has established itself as a powerful player in the global hydrocarbon market and enjoys a prominent position within OPEC. However, rather than resting on its laurels, the country has been proactively pursuing a multi-faceted strategy of diversification away from its traditional reliance on oil. This commitment to transformation was exemplified in 2022, which witnessed a number of key milestones, such as an 11-year-high GDP growth of supported by the non-oil sector and record-breaking international trade.
Moreover, the UAE has also taken a leading role in the fight against climate change, committing to a net zero 2050 pledge and branding 2023 as the “Year of Sustainability.” Additionally, the country has been entrusted with hosting COP28, the largest global energy event, further highlighting its status as a pioneer in sustainable development.
To fast-track its growth over the next five decades, the UAE government has launched Investopia as part of the “Projects of the 50” initiative, which has outlined a comprehensive set of strategic reforms and initiatives. The world has taken notice of the country’s ambitious plans, with investors flocking to seize the opportunities that have been created.
Read: UAE non-oil private sector maintains strong growth
In an exclusive interview with Economy Middle East, His Excellency UAE Economy Minister, Abdulla bin Touq Al Marri shed light on the UAE’s journey toward excellence and the reasons behind its unwavering commitment to sustainable development.
The UAE’s GDP is expected to grow 4.1 percent in 2023, higher than the 3.9 percent forecasted earlier. Which main sectors will contribute to this growth?
I cannot talk about 2023 without talking about 2022. The last year was remarkable on the economic front in the UAE. The economy grew at a strong pace despite a challenging global environment. The GDP is estimated to have grown by 7.6 percent, the highest in 11 years, driven by a rise in oil production, as well as a significant improvement in the non-oil sector. The non-oil GDP was up 6.1 percent, reflecting strong performance in some of the non-oil sectors such as tourism and hospitality, construction, transportation, and manufacturing. Expansion in non-oil business activity was driven by higher client demand across these sectors.
On the international trade front, we saw a record-breaking 17 percent growth in 2022, reaching more than AED 2.2 trillion for the first time in the history of our country. Our exports value surged 6 percent on an annual basis to AED 366 billion. The share of exports in the total non-oil trade rose to 16.4 percent from 12 percent in 2015. The share of re-exports also reached 27.5 percent of total non-oil trade.
Moreover, Let’s not forget that the UAE economy made a strong recovery from the pandemic-induced slowdown: we were one of the first economies in the world to recover from the recession. The strong growth of last year is the fruit of the ambitious economic reform agenda that we launched during the COVID-19 pandemic to support the recovery, including the overhaul of the companies’ law to allow 100 percent free foreign ownership, the modernization of residency regime, and the series of Comprehensive Economic Partnership Agreements (CEPAs) that we started. The impact of above mentioned and other reforms was significant in 2022 and will materialize further in 2023 and beyond.
The UAE Central Bank has revised its forecast for real output growth in 2023 to 3.9 percent, whilst the World Bank expects our economy to grow by 4.1 percent slightly higher than the central bank’s projections. The positive momentum in consumption and investment seen in 2022 is likely to continue this year. We expect the non-oil sector to keep its strong performance, continuing the trend set in 2022, while oil production is likely to be lower if the global economy slows down further. GDP growth will be supported by an increase in our exports, our country’s favorable business climate and world-class infrastructure, a strong performance in the real estate sector, and a continuous rebound in travel and tourism.
So, as you can see, growth figures are strong, particularly considering the difficult global economic conditions; and the strong recovery in the non-oil sector will continue with us in 2023. The International Monetary Fund (IMF) suggested in its latest “Regional Economic Outlook: Middle East and Central Asia” that non-oil growth in the UAE will accelerate over the medium-term with the implementation of ongoing reforms. There is a strong case for optimism despite a challenging global context.
European and possibly the United States economies might be heading towards a recession in 2023. What will the Ministry of Economy do to buck downtrends in 2023, be it inflation, tech stock slide, or continuing war in Ukraine?
Several macroeconomic indicators suggest that 2023 is going to be difficult at the world stage: the global economy is very likely to slow down this year. But the impact on GCC countries, including the UAE, will be less important compared to the rest of the world. The UAE economic outlook remains positive, supported by domestic activity. The macroeconomic and structural policies adopted by our government succeeded at keeping inflation at relatively low levels compared to the rest of the world. Inflation averaged just over 5 percent last year. The Ministry of Economy also took pricing and other measures to protect consumers from unjustified increases in prices. Inflationary pressures are projected to moderate gradually in 2023, including from the impact of tightening financial conditions in advanced economies.
The UAE is a largely globalized economy. We are committed to economic openness. The benefits of trade, investment, and international cooperation in our view outweigh the costs no matter the context. In a way, our economy benefited from increased global uncertainty in the past year. The uncertain global context led to larger financial inflows, contributing to rapid real estate price growth in some segments. FDI inflows are expected to have reached $22 billion, representing 4.3 percent of the GDP. This reflects investors’ confidence in the UAE as a country and as a society, and it is a testimony to the world-class environment for doing business that we offer.
The economic priority going forward is to protect the economy from potential external shocks or at least to attenuate any impact thereof. Elevated oil prices have boosted government revenues and external buffers, but fiscal policy remained more aligned with the macroeconomic environment, channeling domestic surpluses into sustainable investments and targeted support for the most vulnerable.
Trade policy has played a key role in protecting our population from some of the rise in global food prices by offering consumers greater access to low- or no-tariff products. The series of CEPAs that we signed or planning on signing in the next few years aim to diversify our network of trading partners, open new markets for our exporters, and increase the choice of the consumer.
We will continue the implementation of structural reforms here at home as well, including policies related to consumer protection and a revamp of the competition law, which would partly cushion some of the inflation on consumers and increase productivity and competitiveness. We will also give particular attention to human capital for we believe that talent is a vital part of any economy and human capital development will be part of our future growth plans. Finally, by committing to net-zero emissions by mid-century, the UAE has adopted a bold strategy to shield the economy from oil shocks, which is expected to add some degree of certainty in the future.
All eyes will be on the UAE’s hosting of COP28 later this year. You oversee the circular economy policy which is closely related to environmental sustainability and will have a role to play in achieving the country’s climate goals. What can you tell us about it?
The UAE is committed to ensuring sustainable consumption and production patterns as per the SDG 12. The UAE leadership, represented by HH Mohamed bin Zayed Al Nahyan and HH Mohammed bin Rashid Al Maktoum, has vested its trust in the Circular Economy Council and its members, to set the national path to circularity and maximize the use of our precious resources to create a healthier, more sustainable economy. The circular economy policy is working towards the improvement of our management of waste, and the reduction of waste generation overall. 2022 will be remembered as the year that has marked the beginning of the implementation of the roadmap for circularity and we can already showcase some results.
Since the approval of the 22 policies to expedite the transition to a circular economy model in the UAE, in July of last year, the Policy Committee has made important progress towards the implementation of the policies. We finalized the RPET standards (recycled polyethylene terephthalate), and they have been issued by Ministry of Industry and Advanced Technology (MoIAT) regulating the trade of recycled plastic water bottles. This makes the UAE one of the first countries in the region to have classification for products that contain minimum amounts of recycled content. The Electric Vehicle (EV) infrastructure policy is now in the final stage. We finalized the EV infrastructure policy including the EV standards for car manufacturers, which will play a key role in supporting the country’s transition to carbon neutrality by 2050. We inaugurated the UAE Aluminium Recycling Coalition at Emirates Global Aluminium. Finally, as part of our objective to harmonize federal and local strategies, the Committee has engaged with federal and local entities to advance the work related to the 22 policies under each entity.
As a chair of the Committee, I have the responsibility to carry on and implement the full UAE Circular Economy Policy 2021-2031 framework. We will continue the work through programs and projects that are set to attract investments to this field and expand its infrastructure, and in line with the net-zero drive and circular economy principles. Our efforts are being exerted to establish a circular economy database, in addition to offering incentives to encourage the private sector to shift towards clean production methods. We will also pursue an engagement with the private sector to address the challenges business are facing in their shift to a circular economy and support the country’s green development drive. Transitioning towards a new model also requires financing; so, we will be exploring avenues to increase financing for circularity in the private sector. Finally, we will plastic bags ban from January 1, 2024, and will also prohibit all imported plastic cutlery, drinks cups, Styrofoam, and boxes by the beginning of 2026.
The “Year of Sustainability” announced by HH Sheikh Mohamed bin Zayed, the President of the UAE will culminate in COP28. This is a great opportunity for the UAE to lead global climate talks, but it equally puts an additional responsibility on us to further our action towards sustainability and circularity, as well as to advance the country’s vision to become a global pioneer of green development.
In 2022, you launched Investopia as part of the “Projects of the 50.” Before discussing the agenda of Investopia 2023 and your expectations, can you take stock of the activity carried by Investopia in its first year?
The UAE government launched Investopia as part of the “Projects of the 50,” which are a series of strategic initiatives and reforms that will accelerate the nation’s growth over the next five decades. Investopia is an UAE-based platform that connects the international business community to investment opportunities in the new sectors that are likely to constitute the pillars of the economies of the 21st century. We see it as a platform that is our gateway to the emerging industries and the economy of tomorrow.
We kicked off the first edition of Investopia conference to a resounding success on the margin the margins of the World Government Summit in Dubai in 2022. After that, we launched the “Global Talks,” a series of strategic business dialogues with policymakers, investors, and industry experts across several countries. It’s true that Investopia is made in the UAE, but it was designed to have a global outreach. We held global business sessions in New Delhi, Bombay, Geneva, Cairo, New York, Rabat, and Havana, in addition to Abu Dhabi and Dubai, where more than 3000 industry leaders and policymakers gathered in total and led discussions characterized by depth and transparency, with forward-looking solutions to the themes of the sessions.
I should like to mention that Investopia 2022 held the world’s first press conference in the Metaverse attended by an economy minister. Moreover, during the World Cup 2022, we hosted a discussion about the future of investment in sports and the interlinkages between sports and other sectors of the economy such as infrastructure, healthcare, and tourism. Finally, we managed to build strategic partnerships with prominent organizations including the Abu Dhabi Department of Economic Development, Crypto.com, BlackRock, Invest in Sharjah. And I also attended the signing ceremony of an MOU between Investopia and SALT, a premier global thought leadership forum. The strategic partnership aims to leverage synergies between Investopia on the one hand, and these organizations, on the other hand, and open the door for a greater collaboration going forward.
Investopia 2023 will be held under an intriguing theme: “Envisioning Opportunities in Times of Change.” What are your expectations out of the event?
In the beginning, I must highlight that Investopia is designed by business for business, and through our engagement with our partners we aim to be relevant to their agendas in supporting sustainable growth in their respective markets. Investopia 2023 brings opportunities in several sectors as the conference dialogues are focusing on timely and forward-looking issues such as uncertainty, innovation, decarbonization, and the future of finance and sustainable business. Discussions will build on the outcomes of its first conference and its global talks, trying to decrypt trends shaping the future of investment and identify investment opportunities in sectors that will define the economy in years to come.
Moreover, Investopia 2023 will take place against the backdrop of a complex and uncertain international context, be it the pandemic or supply chain bottlenecks, global inflation or monetary policy normalization in advanced economies, technology disruptions or geopolitical tensions. Indeed, opportunities lie in change, but change also involves uncertainty. Uncertainty surrounding investment has theoretical foundations in economics and corporate finance. Therefore, in an ever-changing world, it is of utmost importance for policymakers, investors, and business leaders to tackle such issues, their linkages, and the impact that they can have on investment in the new economic sectors.
Having more than 1000 investors, industry leaders, and policymakers in one place, is vital now, given the global need for more urgent solutions to the challenges that are facing the world economy. Moreover, Investopia is contributing to the revival of the global economic debate, particularly about the post-pandemic economic formations—following a period where the activity of global economic forums declined significantly because of the COVID-19 pandemic.
What are your plans for the current year with regards to Investopia?
Investopia is a strategic initiative from the UAE to the world with an ambitious but essential agenda. From day one, we wanted Investopia to be an ecosystem that draws on the dynamic and imaginative spirit of the UAE but reaches far beyond. We wanted it for those wishing to benefit from the UAE’s unique future-focused economy and its position as an investment hub that serves some of the fastest-growing economies across the Middle East, Africa, and Asia.
We started as a C-level global dialogues platform, and it is now becoming a preferred business destination for investors interested in the new economies because it set itself essentially apart as an investment ecosystem for the new economy through its content and deliverables.
The annual conference Investopia 2023 will launch a marketplace for investment, providing speed-pitching opportunities, facilities for business announcements, and linking investors to promising projects through its platform. In addition to that, we are going to offer investors and business leaders additional opportunities throughout the year to engage with relevant stakeholders from different countries. Investopia will hold roundtables and discussions across global economic and financial hubs such as New York, London, Shanghai, and Milan. Moreover, we will expand local and global partnerships and foster the platform’s status as independent and impartial global hub that brings together all opinions in the world of business.
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