FinTech can help UAE achieve 7% annual growth to support its 2031 target to double economy

Minister of Economy says repeat of GDP growth performance is a priority, despite 'all the challenges'

Minister of Economy Abdulla bin Touq says innovation will be a key to hitting targets. Bloomberg

FinTech is among the sectors that could help the UAE achieve its aim of posting another year of 7 per cent growth this year, repeating last year's economic performance, the Minister of Economy has said.

Despite all the challenges, carrying the economic growth momentum from 2022 is a priority for the country as it needs to stay on track to achieve its target of doubling its economy by 2031, Abdulla bin Touq told delegates at the Dubai FinTech Summit on Monday.

The Arab world's second-largest economy surprised the world in 2022 as it surpassed estimates of 4 per cent to 5 per cent gross domestic product expansion, posting 7.6 per cent GDP growth for the year.

That was a “huge, huge achievement for the UAE economy”, he said. However, with growing headwinds for the global economy, the UAE economy is expected to expand by 3.5 per cent this year.

But despite all the challenges, “we want more”, he added.

“We have a KPI [key performance indicator] of doubling the economy in the next seven years and for doing so, we need to hit 7 per cent GDP growth every year,” Mr bin Touq said.

Growth in traditional economic sectors may not be able to deliver expansion of this magnitude, so diversification and the development of new economy sectors including FinTech and innovation will be key to UAE achieving its targets, he said.

“The UAE always has an eye on the future economies … we have an appetite for 7 per cent yearly [growth] and I think that 7 per cent will be done in this room,” he told delegates.

“You guys have a mandate to help me reach the growth for the UAE, specifically the emirate of Dubai.”

Family offices diversifying their businesses away from traditional economic sectors to the new economy can also give a shot in the arm to the country's economic growth momentum.

“That's the most important [thing] now … how can we get the family businesses more involved,” Mr bin Touq said.

The UAE economy has bounced back strongly from the coronavirus-induced slowdown as higher oil prices and measures to mitigate the impact of the pandemic helped drive the growth.

The economic expansion last year was the highest in 11 years, after growth of 3.9 per cent in 2021, according to the UAE Central Bank. The economy is projected to grow by 3.9 per cent in 2023 and 4.3 per cent in 2024, according to the regulator.

Despite tighter global financial conditions the UAE's non-hydrocarbon real growth will remain strong at 4.8 per cent this year, the Institute of International Finance said in a report last month.

That is above the 4.2 per cent estimate of the Central Bank for this year and its 4.6 per cent forecast for 2024.

An array of array of government measures have enhanced the resilience of the UAE economy in the face of global economic challenges including volatile commodity prices, inflation, supply chain disruptions and geopolitical uncertainty.

Black swan events that would happen once a decade are now happening at a greater frequency, Mr bin Touq said. However, being adaptable and making continuous regulatory changes were the keys to survive adversity.

The government has already taken steps, such as granting of 100 per cent foreign ownership, the issuance of legislation to protect intellectual property and the launch of a strategy to attract talent and skills in all sectors to enhance the country's position as a permanent centre for creativity and innovation.

The policy measures adapted two years ago are delivering results today and the country will keep on evolving its regulatory framework, keeping the challenges of the future in mind, the minister said.