“GCC and Emerging markets (EM) were significantly impacted in 2022 by
high inflation, oil prices fluctuations, interest rates hikes, food supply
disruptions because of the ongoing conflict in Ukraine. However, the EM’s
growth rate is projected to marginally improve from 3.9% in 2022 to 4% in 2023.
The GCC growth rates will however decline to 3.2% (PY 7.8%) due to softening of
oil prices, bank credit tightening, and overall slowdown affecting the demand
and trade flows from major economies. FY 2023 to date, has also seen the bank
crisis unfold in US/ Europe and then contained by governments, though risks
remain high. Further, surprise production cuts were announced by OPEC+, that is
resulting in oil prices remaining high. It is still to be seen how major
shale producers like US respond to contain impact on the economy.
Global headwinds remain tough to navigate, since US & Europe
continue to struggle to wade off recession, with high inflation, demand and
supply gaps and the ongoing energy crisis. Despite these challenges, GCC
economies non-oil growth levels are expected to remain strong due to their
diversification initiatives. It is also driven by the performance of wholesale
and retail sectors, while a marked rebound in travel, leisure, and business
tourism has also fueled growth in several allied service sectors, including
real estate. The UAE’s projected surplus is estimated to be at 6.20% of GDP for
2023 (PY 10.50%), due to lower oil prices overall.
Our quarterly review as enclosed, thus illustrates the major economic
and financial trends prevailing during Q1 2023 across the region, to help you
understand the current challenges and how economies are dealing with these