UAE to touch over 6% in GDP growth in 2022, buoyed by economic tailwinds 

UAE to touch over 6% in GDP growth in 2022, buoyed by economic tailwinds 
The non-hydrocarbon growth is also set for an upswing thanks to the ongoing measures taken by the UAE government. (Shutterstock)
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Updated 22 November 2022

UAE to touch over 6% in GDP growth in 2022, buoyed by economic tailwinds 

UAE to touch over 6% in GDP growth in 2022, buoyed by economic tailwinds 

RIYADH: The gross domestic product growth of the UAE is expected to reach over 6 percent in 2022, firmly outperforming the 3.8 percent rate registered last year, said a senior official of the International Monetary Fund. 

After discussions with the UAE authorities from Nov. 2-17, Ali Al-Eyd, the head of the 2022 Article IV Consultation, concluded that the country’s near-term growth is strong. 

“Economic growth has been robust this year, led by a strong rebound in tourism, construction and activity related to the Dubai World Expo, as well as higher oil production in line with the OPEC+ production agreements,” Al-Eyd said in a press statement. 

Fiscal and external surpluses increased further, benefiting from the higher oil prices and the pullback of the temporary COVID-related fiscal support to businesses and households as the pandemic has gradually waned. 

“Increased global uncertainty led to larger financial inflows, contributing to rapid real estate price growth in some segments,” he added. 

The non-hydrocarbon growth is also set for an upswing thanks to the ongoing measures taken by the UAE government. According to the UAE central bank estimates, the real non-hydrocarbon GDP declined by 5.7 percent in 2020. 

“We expect non-hydrocarbon growth to be around 4 percent in 2023 and to accelerate over the medium term with the implementation of ongoing reforms,” pointed out Al-Eyd. 

Nevertheless, the outlook is subject to significant external uncertainties, including the impacts of global economic and financial headwinds, geopolitical developments and the recently announced OPEC+ production cuts. But, much of it could be countered. 

“Higher oil prices and healthy fiscal buffers help mitigate risks while enhancing reform efforts would pose upside risks to medium-term growth,” added Al-Eyd. 

Also, the strong tailwinds from the banking sector are another factor that ensures financial stability. UAE banks have adequate capital and abundant liquidity. The asset quality has improved modestly from pandemic-era peaks. Domestic credit growth of private-sector has also gotten better.  

Moreover, real estate price developments and expected further tightening of financial conditions underscore the importance of continued close monitoring of the economic situation. 

“We welcome continued efforts by the Central Bank of the United Arab Emirates to strengthen the macro-prudential framework and promote the effective management of non-performing loans,” highlighted Al-Eyd. 

Significant efforts have been advanced under the National Anti-Money Laundering and Combatting Financing of Terrorism Strategy has further strengthened the regulatory regime to ensure its effectiveness, besides enhanced monitoring under the Financial Action Task Force recommendations. 

“These should be further advanced to underpin a gradual, growth-friendly fiscal consolidation in the context of a strong medium-term fiscal framework to maintain fiscal sustainability,” added Al-Eyd. 


LEAP 2023 attracts funds worth $2.43bn for tech startups  

LEAP 2023 attracts funds worth $2.43bn for tech startups  
Updated 10 sec ago

LEAP 2023 attracts funds worth $2.43bn for tech startups  

LEAP 2023 attracts funds worth $2.43bn for tech startups  

RIYADH: Investment programs worth $2.43 billion were announced on the third day of the Saudi tech event LEAP 2023, following on from the $9 billion in deals revealed on the event's first day.   

The new funding announced on Wednesday will support the growth of emerging technology companies in Saudi Arabia. This is in addition to eight other investment funds worth $646 million launched during the event to stimulate innovation and digital entrepreneurship.   

Organizations providing the $2.43 billion funding include Saudi Arabia’s Riyad Bank, which announced the launch of $1 billion in financing for telecommunications and information technology enterprises. The National Technology Development Program also started six new initiatives and attracted a corpus of $430 million from global technology companies.  

Banque Saudi Fransi is another Saudi bank that signed off on a finance portfolio, this one worth $1 billion to finance and grow companies in the information and communication sector.  

According to the Ministry of Communications and Information Technology, the funding included one from STV worth $150 million, which is its first fund for alternative financing that is compatible with Islamic law.  

Additionally, Riyadh-based IMPACT46 also announced the launch of a $133 million fund, which targets emerging technology companies in the Kingdom and the Middle East.  

The list also includes Merak Capital which launched Merak Fund for direct financing, valued at $53 million, for nurturing technology companies in the Kingdom, even as the Saudi Investment Bank earmarked $40 million for an innovation incubator in the field of financial technology.  

The announcements included Rakeza’s venture capital fund backed by a global business accelerator in Riyadh valued at $25 million and the launch of BIM Ventures, a business development company worth $100 million in partnership with Al-Sulaiman Group to spot innovative and financially sustainable technology companies.  

On Wednesday, Shorooq Partners launched a financial fund to accelerate electronic games estimated to be $115 million, while Planetary Capital floated the first Saudi-Canadian corpus to invest in emerging space technology companies, both local and global, amounting to $30 million.  

The event also bolstered the Saudi-Chinese relationship as Camel Lab partnered with Hong Kong-based Android developer Weo Technology to launch an application called Ha, the latest and most competitive social platform ever. 


ZATCA conference aimed at upgrading taxation system kicks off with multiple agreements  

 ZATCA conference aimed at upgrading taxation system kicks off with multiple agreements  
Updated 59 min 4 sec ago

ZATCA conference aimed at upgrading taxation system kicks off with multiple agreements  

 ZATCA conference aimed at upgrading taxation system kicks off with multiple agreements  

RIYADH: Saudi Arabia is progressing its tax, zakat and customs systems amid a push to adopt advanced technology as the Kingdom looks to elevate economic activities, said Minister of Finance Mohammed Al-Jadaan.  

The minister was speaking at the Zakat, Tax and Customs Conference being held in Riyadh to discuss the global experiences and deliberate on the future of the digitalization of such sectors. 

“We continue the development of the tax, zakat, and customs systems through the initiatives undertaken by the government, including the national program that will elevate economic activities and will improve economic conditions,” said Al-Jadaan.  

Al-Jadaan also pointed out that the implementation of advanced technology is necessary for the tax, zakat, and customs system for a better outcome.  

“Advanced technologies will enhance the tax, customs and zakat systems and will enrich the business community. It will also ensure that will also achieve qualitative leaps in this field. This conference will open new horizons of cooperation and to reach the best practices in combating the challenges,” he said. 

Opened on Feb. 8, the two-day conference being organized by the Zakat, Tax and Customs Authority saw the signing of multiple agreements between the tax authority and various other entities.  

On the first day, the authority signed a cooperation agreement with the Ministry of National Guards in Saudi Arabia to provide security services, while another deal was inked with the General Directorate of Civil Defense.  

After the opening ceremony, a cooperation agreement was announced between the ZATCA and the General Authority of Civil Aviation to enhance and drive joint services between both authorities.  

The conference witnessed the signing of another cooperation agreement between ZATCA and Saudi Chambers.  

On the first day, ZATCA also signed an agreement with the Red Sea Co., aimed at applying customs control and providing reexports for the Red Sea Co.  

At the conference, a memorandum of understanding was inked between ZATCA and the Australian tax office aimed at setting the general framework, and cooperation activities including knowledge sharing, training, and participation of workshops in areas of interest between the two entities.  

Another agreement was signed on the first day of the conference between ZATCA and Saudi Co. for Exchanging Digital Information, or Tabadul, aimed at providing electronic services.  

Al-Jadaan also highlighted the necessity of international cooperation in tax systems for a better future.  

“This conference is held in light of the challenges faced by global economic development. We need to face these challenges by improving the level of coordination among different sectors, international organizations, and countries in all the economic, social and security fields,” he noted. 


Dollar drops as Fed’s Powell repeats disinflation comments, seen less-hawkish

Dollar drops as Fed’s Powell repeats disinflation comments, seen less-hawkish
Updated 08 February 2023

Dollar drops as Fed’s Powell repeats disinflation comments, seen less-hawkish

Dollar drops as Fed’s Powell repeats disinflation comments, seen less-hawkish

NEW YORK: The dollar fell from one-month highs on Tuesday after US Federal Reserve Chair Jerome Powell doubled down on statements last week that disinflation has started, saying he expects significant declines in inflation this year.

Powell did not revert to a hawkish stance despite last Friday's blockbuster US non-farm payrolls report, which led investors to believe the Fed is not likely to tighten more than what has been priced in by the market.

The greenback dropped across the board, led by losses versus the yen, Swiss franc, as well as the Australian and New Zealand dollar.

In a question-and-answer session at the Economic Club of Washington, the Fed chief did say the return to the US central bank's inflation goal of 2 percent would be a bumpy process, which would need further rate increases.

Powell, however, declined to equate the surprising strength in the job market shown in the January employment report with an expectation that interest rates would need to be higher than Fed officials estimated late last year.

Friday's US jobs report wrongfooted traders who were banking on an imminent pause in the Fed's rate-hike cycle, and gave the dollar a leg up.

The dollar index, which measures the performance of the greenback against a basket of six other currencies, fell to session lows after Powell's remarks. It was last down 0.2 percent at 103.39.

US interest-rate futures show that markets are expecting the Fed funds rate to peak just above 5.1 percent by June, compared with expectations of a peak below 5 percent prior to Friday's jobs report.

In afternoon trading, the euro was little changed against the dollar at $1.0719 after earlier falling to a five-week low of $1.0670.

The dollar dropped 1.2 percent versus the yen to 131.07 yen, after rising to a one-month peak on Monday. The yen was hit by a Nikkei report that said Japan's government has sounded out Bank of Japan Deputy Governor Masayoshi Amamiya to succeed incumbent Haruhiko Kuroda as central bank governor.

Amamiya is seen as more dovish than other contenders.

Sterling was up 0.1 percent against the dollar $1.2035 after tumbling to a one-month low of $1.1974 in the previous session.

Investors are looking for further commentary from central bankers this week following what was viewed as a dovish outcome of the Bank of England's meeting last week. The Australian dollar was up 0.9 percent at $0.6943 after having surged as much as 1 percent after the country's central bank raised its cash rate by 25 basis points and said more increases would be needed, a more hawkish policy tilt than many had expected.


Assets allocated to APICORP’s debut green bond reach $335m in 2022

Assets allocated to APICORP’s debut green bond reach $335m in 2022
Updated 08 February 2023

Assets allocated to APICORP’s debut green bond reach $335m in 2022

Assets allocated to APICORP’s debut green bond reach $335m in 2022

RIYADH: Assets allocated to the Arab Petroleum Investment Corp.’s debut green bond reached $335 million as of Oct.31, 2022, according to the financial institution’s latest green bond report for the last year.

It noted that APICORP’s total portfolio of environmentally linked assets financed in 2022 as of Oct.31 reached $664 million, which makes up 13 percent of the total loan portfolio compared to 3 percent in 2016.

The latest report follows the global best practices to measure the impact of APICORP’s debut $750 million green bond issuance in October 2021, which has been allocated to 10 projects in five countries, including Saudi Arabia, the UAE, Egypt, Jordan, and Spain, according to a statement.

The remaining $415 million from the unallocated green bond proceeds was invested into other green assets including securities and funds which comply with the green bond framework.

According to APICORP, the financed projects collectively generate 9.4 terawatt-hours of clean energy for nearly 1 million homes and help reduce annual emissions of 20 million tons of carbon dioxide.

“APICORP follows a rigorous review process for any transaction identified as eligible for green financing under our Green Bond Framework,” said Yasser Gado, treasurer and chairman of the Green Bond Committee at APICORP.

He added: “Through our due diligence process, deployment of proceeds has been challenging given the economic conditions that impact manufacturing and supply chain, but we expect conditions to improve and we can finance high-quality clean energy projects with the remaining proceeds.”

 The global green bond market has been gaining traction in the past decade and is projected to surpass $5 trillion by 2025, driven by increasing demand for sustainable investment options and a growing awareness of the need to address climate change challenges

Established in 1975 by 10 Arab oil-exporting countries, APICORP is an energy-focused multilateral financial institution, which works to support the sustainable development of the region’s energy sector and related industries through a range of financing and direct equity solutions, as well as energy research and advisory services.


Moody’s cuts Egypt rating to B3, changes outlook to stable

Moody’s cuts Egypt rating to B3, changes outlook to stable
Updated 08 February 2023

Moody’s cuts Egypt rating to B3, changes outlook to stable

Moody’s cuts Egypt rating to B3, changes outlook to stable

RIYADH: Ratings agency Moody's lowered Egypt's sovereign rating by one notch to B3 from B2 on Tuesday, citing the country's reduced external buffers and shock absorption capacity.

The agency changed its outlook for Egypt to stable from negative.

"Moody's does not expect Egypt's liquidity and external positions to rebound quickly," the agency said.

Egypt has continued to face a foreign currency shortage despite allowing the Egyptian pound to depreciate sharply in recent months.

The country's headline inflation is expected to accelerate further in January after surging to its highest in five years in December, according to a Reuters poll.

The agency also lowered Egypt's local-currency ceilings to Ba3 from Ba2.