The UAE economy grew by 3.8% in Q1 this year, according to a report by the Organisation of the Petroleum Exporting Countries (OPEC).

Within its September 2023 report, OPEC said it forecasts the UAE’s economic growth to continue, adding that key sectors of the economy have witnessed considerable growth.

The most prominent sectors with substantial growth were transportation and storage, with 10.9% growth, construction with 9.2% and accommodation and food services with 7.8%, the OPEC findings show.

The report also revealed that the UAE’s travel and tourism sector is playing a significant role in fuelling economic growth. In the first half of the year, the number of visitors to Dubai surpassed pre-pandemic levels, Gulf Today reports.

The number of international visitors to the UAE is forecast to rise by almost 40% this year, according to Oxford Economics. This would mark a 17% rise over the 2019 level.

In addition, the Central Bank of the UAE has reflected the Federal Reserve’s rate policy, keeping the key interest rate the same at 5.4%.

Furthermore, according to Standard & Poor’s Global Ratings, UAE banks will achieve a robust performance this year. The credit rating agency said in a recent report that UAE banks will benefit from strong non-oil GDP growth, which will ease the impact of rising rates on credit growth.

The report forecasts bank credit growth at UAE banks to increase to around 7% this year from 5% in 2022. The performance of UAE banks improved during the first six months of the year due to the rise in interest rates, and high rates are forecast to continue to bolster banks’ profitability.

“Despite a slight deterioration in asset quality indicators and an increase in the cost of risk, we expect GCC banks will report stronger profitability in 2023. This is because of higher net interest margins and generally lower-cost business models,” said S&P Global Ratings credit analyst Zeina Nasreddine.