Economic and Financial Trends July 2023

Economic And Market Update 

Economic And Financial Trends July 2023 

Economic and Financial Trends July 2023

Global GDP growth forecast has risen slightly to 3.0% in 2023 while MENA estimates fall by 0.5% to 2.6% in 2023 due to OPEC+ oil production cuts announced by KSA and lower oil prices because of demand slowdown. The UAE GDP has grown by 3.8% in Q1 2023, as per data released by the Federal Centre for Competitiveness and Statistics. As expected, both headline and non-oil GDP growth slowed compared to 2022 due to slower global growth, climate change risks, oil prices spikes affecting demand and higher interest rates. Russia and Ukraine war continues to heighten economic risks overall including food supply chains.

However, the UAE, remains firmly in the growth trajectory as firms displayed a greater degree of confidence in future activity as S&P Global PMI rates reached its highest level since 2021 rising from 55.5 in May to 56.9 in June 2023. This is reflected in the 4.5% increase in non-oil GDP for Q1 2023. Further, the UAE has ranked first in the Arab world and 19th globally in its ability to attract foreign direct investment (FDI) inflows, as per the World Investment Report 2022.

Dubai’s main share index DFM GI sees gains – led by a rise in top lender Emirates NBD and DEWA. Following the US Fed’s decision to raise interest rates by another 25 basis points, the UAE has also raised the benchmark base rate applicable to overnight deposit facility (ODF) by another 25 basis points – from 5.15% to 5.40%. However, overall business optimism remains intact due to liberal business policies, the central bank approaching the end of its liquidity tightening cycles, gold futures are back at $2000 levels – a 4 month high.

The attached monthly report highlights major economic and financial trends unfolding across the UAE and the GCC region.

Read More