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

FinTech is among the sectors that can help the UAE achieve its goal of posting a new year of 7 percent growth this year, repeating last year’s economic results, the finance minister has said.

Despite all the challenges, sustaining the economic growth from 2022 is a priority for the country as it needs to stay on track to reach the target of doubling the 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 when it surpassed estimates of 4 percent to 5 percent gross domestic product growth, with GDP growth of 7.6 percent for the year.

It was a “big, big achievement for the UAE economy”, he said. But with growing headwinds for the global economy, the UAE economy is expected to grow by 3.5 percent this year.

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

“We have a CPI [key performance indicator] to double the economy in the next seven years, and to do that, we need to reach 7 percent GDP growth every year, bin Touq said.

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

“The UAE always has an eye on the economies of the future… we have an appetite for 7 percent annually [growth] and I believe that 7 percent will be done in this room, he told delegates.

“You have a mandate to help me achieve growth for the United Arab Emirates, especially the Emirate of Dubai.”

Family offices that diversify their businesses away from traditional economic sectors into the new economy can also provide a shot in the arm to the country’s economic growth momentum.

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

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

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

Despite tighter global financial conditions, the UAE’s real growth excluding hydrocarbons will remain strong at 4.8 percent this year, the Institute of International Finance said in a report last month.

This is above the estimate of 4.2 per cent from the central bank for this year and the forecast of 4.6 per cent for 2024.

A number of government measures have improved 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 with greater frequency, bin Touq said. However, being adaptable and making continuous regulatory changes was key to surviving adversity.

The government has already taken steps, such as allowing 100 percent foreign ownership, issuing legislation to protect intellectual property and launching a strategy to attract talent and expertise in all sectors to strengthen the country’s position as a permanent center for creativity and innovation.

The political measures that were adapted two years ago are yielding results today, and the country will continue to develop its regulatory framework, considering the challenges of the future, said the minister.

Updated: May 8, 2023, 1:28 p.m