UAE aims to boost FDI and eyes 6% economic growth in 2022, minister says

The country is looking to sign eight Comprehensive Economic Partnership Agreements this year and 27 overall

Abdulla bin Touq Al Marri, UAE Minister of Economy, has called for more economic growth. Victor Besa / The National

The UAE is keen to increase foreign direct investment flows to the country, a central pillar of the country's growth agenda, and aims to boost economic output by up to 6 per cent in 2022 despite headwinds and global geopolitical challenges, Abdulla bin Touq, UAE Minister of Economy, said.

"If we want to double our economy from Dh1.4 trillion ($381 billion) to Dh3tn in seven years that we have announced, we have to average a growth of about 5 per cent to 6 per cent," the minister told reporters on the sidelines of the Annual Investment Meeting in Dubai on Monday. "I’m hoping for that target to happen this year."

However, there are challenges as the UAE’s economy is part of the global economy and the country cannot overlook the global geopolitics, but remains focused on its own goals and progressing, he said.

The government is also keen to continue increasing FDI at a time when the global investment landscape is changing rapidly, thanks to post-pandemic trends, evolving economic priorities and a sharp rise in digitalisation, he earlier told delegates at the summit.

“One fact remains unchanged, FDI plays a significant role in our continuing efforts to achieve economic growth and prosperity,” he said.

The UAE’s performance in 2021 demonstrates “the importance we have placed on attracting FDI into our country”, the minister added.

The country was among the top-20 economies for FDI globally last year as foreign investment inflows increased 4 per cent annually to $20.7 billion. That led to the country's "cumulative FDI" over the past 10 years reaching nearly $171.6bn by the end of 2021, a growth of 13.7 per cent.

“Despite the impact of pandemic on trade and investment exchanges and related challenges, the UAE has set an example by showing how every challenge can be turned into an opportunity,” Mr Bin Touq said.

Russia's war in Ukraine has muddied the global economic outlook and rising oil prices are stoking fears of higher inflation. Fitch Ratings slashed its global economic forecast by 0.7 percentage points to 3.5 per cent in 2022. The International Monetary Fund is expected to lower its global growth projections as the Ukraine crisis will likely force global trade to contract this year.

The UAE, however has maintained a strong economic momentum. The Central Bank of the UAE estimates the economy will grow 4.2 per cent in 2022, higher than a previous forecast of 3.8 per cent.

The UAE’s economy is expected to grow 4.9 per cent in 2022, according to Japan's Largest lender MUFG, while Dubai's biggest bank by assets Emirates NBD forecasts an expansion of 5.7 per cent and Abu Dhabi Commercial Bank estimates 5 per cent, supported by strong oil sector growth. Emirates NBD estimates the non-oil economy growing 4 per cent, while ADCB forecasts 3.5 per cent growth.

On Monday at the Investopia Summit in Dubai, Mr Bin Touq said the UAE plans to sign eight Comprehensive Economic Partnership Agreements this year and 27 overall.

The Cepa agreement signed with India in February will create 250,000 jobs in that country, he said at the summit in Dubai. The Cepa agreement with India will boost non-oil trade between the two countries to $100 billion in five years, from $60bn currently.

The UAE and Israel are also set to sign a trade and economic co-operation agreement this month. The Emirates is further strengthening relations with key trading partners. It is currently in Cepa negotiations with Indonesia, the biggest South-East Asian economy.

A similar deal is being negotiated with South Korea, which is expected to be finalised by the end of 2022. The agreement with South Korea aims to enhance the economic partnership between the two countries to a minimum of $20bn in the next three to five years.