With more than $545bn-worth of projects planned or underway, the UAE is the second largest projects market in the region after Saudi Arabia. Of this, about $136.8bn of projects are currently in execution, with a pipeline of nearly $410bn of projects in planning or pre-execution. There are nevertheless brighter things on the horizon, with more than $60bn-worth of projects in the bidding phase alone. The passage of these schemes into execution should only be hastened by the hale and hearty state of the wider economy.
The second largest economy in the GCC and the wider MENA region, the UAE has effective governance, manageable debt, ample foreign reserves and vast sovereign wealth. Further non-oil growth nevertheless remains the relentless focus of policy-making, with the aim of establishing the country as a regional hub for everything from manufacturing to financial technology.
Dubai’s new economic plan
Dubai will rank among the top four global financial centres in the world by 2033, according to a plan launched by Sheikh Mohammed bin Rashid al-Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, in early January 2023. The Dubai Economic Agenda 2033 (D33) aspires to generate up to AED32tn ($8.7tn) over the next 10 years and double the size of Dubai’s economy.
The plan entails doubling Dubai’s foreign trade to AED25.6tn, connecting Dubai with 400 new cities, and attracting an average of AED60bn of foreign direct investment annually, up from the current average of AED32bn. Under D33, private sector investments, which totalled AED790bn in the past decade, are expected to reach AED1tn by 2033.
UAE projects market and outlook
Badly hit by Covid, the market saw contract awards witness about $20.5bn in 2020, down from an average of about $43.4bn in the years preceding the pandemic. While 2021 saw a recovery to $26bn-worth of awards, the 2022 figure of $23.1bn remains some way off matching this figure.
In another concerning trend, UAE project completions have continued to outweigh project awards. In 2022, project completions have outstripped awards by more than $17bn in the fourth year of similar declines. The shift to alternative models such as public private partnership (PPP) will continue in the future. In terms of future projects, the construction sector is the largest, with about $228.7bn-worth of projects in the tender, design or study phase. This is followed by the oil and gas sector, which has more than $90bn-worth of contracts in various stages of preexecution.
Economic climate and outlook
A combination of sustained higher oil prices and non-oil factors have coincided to ensure that the UAE’s post-Covid recovery has continued to gain momentum in spite of the worsening global economic climate. According to the Washington based IMF, the UAE’s real GDP growth has accelerated to an estimated 7.4 per cent in 2022, up from its October forecast of a growth rate of 5.1 per cent. The rate of growth achieved by the UAE in 2021 has also been recalculated to 3.9 per cent. The UAE’s real GDP growth is projected to be 3.5 per cent in 2023 and 3.9 per cent in 2024. Overall, the projected growth places the performance of the UAE ahead of the global average of 2.9 per cent growth for 2022, amid worldwide energy and food price inflation, as well as the higher 5.4 per cent growth rate in the Middle East and North Africa (MENA) region, which has been led by the region’s energy exporters.