Economic And Market Update

“The UAE and GCC economies continue to grow with governments actively pursuing revenue diversification and sustainable initiatives- COP28, introduction of UAE Corporate Tax w.e.f June 1, 2023 and continued fast pace of economic reforms. Further we are seeing improving geo-political tailwinds from the middle east which is a key positive. Higher FDI also being a key driver of increased economic activity the region. The S&P global composite PMI data for UAE shown marked improvement during 2023.

Further overall economic data from developed economies has been surprisingly resilient so far, despite the headwinds of stubbornly high inflation, continuing banking & energy crisis, and rising interest rates. The Fed is however likely to pause further hiking of rates for now amid the ongoing US debt ceiling crisis which appear to be resolved for the short term. ECB and BoE are however expected to raise rates further.

The benchmark rates are forecast to go down towards end of 2024 as per current forecasts. Oil prices have declined due to lower demand and slower growth in China, India, and other major economies, besides higher impact of push for non-fossil fuels and increasing adoption of EV electric transportation solutions worldwide. The OPEC+ had to resort to production cuts earlier this year effective for remainder of 2023, to maintain and stabilize crude prices at current levels of around $70-$85 per barrel.

The key trends in technology space were mainly shaped by climate tech and sustainability projects, sharp rise in Open AI investments by all major players like Google and Microsoft this year, which has taken the world by storm. Higher investments continue to flow into the Fintech world. The Start-up funding and exit deals have improved but declined overall. Number of IPO transactions for Q1-2023 have slowed down compared to same period of 2022, however the pipeline remains strong in the region.”

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