The UAE's economy, the Arab world's second-largest, grew by 3.8 per cent on an annual basis in the first quarter of this year, boosted by its strong non-oil sector as it continues to push for diversification.
Gross domestic product in the three months to the end of March increased to Dh418.3 billion ($113.9 billion), from Dh403.3 billion a year ago, Abdulla bin Touq, Minister of Economy, said on Tuesday, quoting preliminary estimates from the Federal Centre for Competitiveness and Statistics.
Most sectors and economic activities that serve as “the key pillars of the national economy made significant contributions”, Mr bin Touq said.
Non-oil GDP rose 4.5 per cent year on year to Dh312 billion, up from Dh298.5 billion in the same period last year, reflecting the success of the UAE's efforts to promote the growth of non-oil economic sectors and transition to an economic model based on knowledge and innovation.
“The flexible economic policies that we adopted to support this goal rely on speed and accuracy in responding to global changes, the formulation of forward-looking strategies and plans to drive economic diversification, and the constant upgradation of economic procedures and legislation,” Mr bin Touq said.
The country's economy, which rebounded strongly last year from the slowdown caused by Covid-19, has carried the growth momentum into 2023. The resurgence has come on the back of higher oil prices and government measures to mitigate the impact of the pandemic.
The UAE's GDP grew by 7.9 per cent in 2022, the most in 11 years, to Dh1.62 trillion at constant prices in 2022, supported by the non-oil sector.
An array of measures adopted by the government have improved the resilience of the economy despite volatile world commodity prices, inflation and monetary policy uncertainty, Mr bin Touq said in March.
Business activity in the non-oil private sector strengthened in June as new order growth hit a four-year high, the most pronounced improvement since June 2019.
The seasonally adjusted S&P Global purchasing managers’ index reading climbed to 56.9 in June, from 55.5 in May, with the health of the non-oil private sector improving in each of the past 31 survey periods.
The 50-point mark separates expansion from contraction.
The UAE economy is expected to expand by 3.3 per cent this year and 4.3 per cent in 2024, according to the UAE Central Bank data.
Looking ahead, the Emirates aims to double the size of its economy to Dh3 trillion by 2031, with a focus on boosting non-oil exports and the tourism sector.
The transport and storage sector saw the biggest percentage rise in of terms of growth, contributing Dh21.8 billion to the economy, an almost 11 per cent increase on an annual basis during the first quarter, the data showed on Tuesday.
The construction sector was second, posting 9.2 per cent year-on-year growth to Dh36.3 billion, followed by accommodation and food services, which grew 7.8 per cent on an annual basis.
The finance and insurance sector recorded 7.7 per cent growth, while wholesale and retail sector grew by 5.4 per cent.
Non-financial projects sector grew 3.5 per cent, ICT improved 3.3 per cent and real estate posted a 3.1 per cent growth, according to the preliminary data.
“These efforts have helped to maintain the UAE’s position as an attractive environment for investments on an ongoing basis, thus underlining foreign trade and openness to the world as the key aspects of its global partnerships,” Mr bin Touq said.
He said the latest results reflect the UAE's economic resilience and sustained growth momentum, moving a step closer to achieving the economic objectives of the We the UAE 2031 vision.
“This year, we will launch a new phase of sustainable economic development in line with the continuing national efforts to scale greater heights in terms of economic performance,” Mr bin Touq said.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The drill
Recharge as needed, says Mat Dryden: “We try to make it a rule that every two to three months, even if it’s for four days, we get away, get some time together, recharge, refresh.” The couple take an hour a day to check into their businesses and that’s it.
Stick to the schedule, says Mike Addo: “We have an entire wall known as ‘The Lab,’ covered with colour-coded Post-it notes dedicated to our joint weekly planner, content board, marketing strategy, trends, ideas and upcoming meetings.”
Be a team, suggests Addo: “When training together, you have to trust in each other’s abilities. Otherwise working out together very quickly becomes one person training the other.”
Pull your weight, says Thuymi Do: “To do what we do, there definitely can be no lazy member of the team.”
Top financial tips for graduates
Araminta Robertson, of the Financially Mint blog, shares her financial advice for university leavers:
1. Build digital or technical skills: After graduation, people can find it extremely hard to find jobs. From programming to digital marketing, your early twenties are for building skills. Future employers will want people with tech skills.
2. Side hustle: At 16, I lived in a village and started teaching online, as well as doing work as a virtual assistant and marketer. There are six skills you can use online: translation; teaching; programming; digital marketing; design and writing. If you master two, you’ll always be able to make money.
3. Networking: Knowing how to make connections is extremely useful. Use LinkedIn to find people who have the job you want, connect and ask to meet for coffee. Ask how they did it and if they know anyone who can help you. I secured quite a few clients this way.
4. Pay yourself first: The minute you receive any income, put about 15 per cent aside into a savings account you won’t touch, to go towards your emergency fund or to start investing. I do 20 per cent. It helped me start saving immediately.
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THE SPECS
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