Economic And Market Update

“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 issues.”

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