Central Bank expects UAE GDP to grow by 7.6% in 2022

The Central Bank of the United Arab Emirates (CBUAE) has unveiled its annual report for 2022, which reviews the most important achievements and initiatives that enhance monetary and financial stability in the country, in addition to the projects and initiatives launched during the year 2022.

The report pointed to the Central Bank's supervisory and supervisory achievements in enhancing monetary stability and resilience of the financial sector, and supporting economic activity in the UAE.

It also sheds light on the economic developments locally, regionally and globally, which confirm that the UAE economy was among the best performing global economies supported by the decisions and directives of the wise leadership, proactive measures, and the reopening of the economy after the Covid-19 pandemic.

The report indicates that the UAE's GDP is expected to grow by approximately 7.6% in 2022, supported by remarkable activity across all sectors, and is one of the highest growth rates globally that has slowed due to rising global interest rates and geopolitical tensions.

Despite rising global inflation sharply amid pressure on supply chains and rising commodity prices, inflation in the UAE remained well below the global average at 4.8%, with a decline expected in 2023.

In light of the expectations of global economic contraction and recession, the Central Bank, chaired by His Highness Sheikh Mansour bin Zayed Al Nahyan, Vice President of the UAE, Deputy Prime Minister, Minister of the Presidential Court and Chairman of the Board of Directors of the Central Bank of the UAE, continued to implement its macroprudential and monetary policies, taking into account the strategic roadmap pursued by the UAE government to maintain the country's competitiveness, ensure high economic growth, and create and secure job opportunities for citizens.

The report noted that the Central Bank has achieved an important step by ending most of the temporary support measures aimed at supporting borrowers to cope with the repercussions of the Covid-19 pandemic. The move reflects the return of the banking system to pre-pandemic profitability and financial strength.

According to the report, the banking sector continued to support the economy through lending to the private sector, banking sector assets and gross written premiums in the insurance and bank credit sector increased, while the Central Bank conducted regular asset quality assessments.

Within the framework of strengthening its role as a supervisory and supervisory authority for the financial and insurance sector in the UAE, the Central Bank has strengthened the regulatory frameworks for licensed financial institutions, especially in the field of corporate governance and risk management of insurance companies, which contributed to the development of the regulatory environment for insurance companies and related professions operating in the country.

The Central Bank also conducted fundamental reviews, follow-up and objective assessments of potential risks facing licensed financial institutions with a view to measuring their financial performance and verifying enhanced regulatory requirements, including capital, liquidity, profits, credit quality, service control measures and operational flexibility.

He strengthened his supervisory cooperation and coordinated transparency and control procedures on the external operations of locally established banks, conducting six external tests based on his risk-based supervisory and supervisory plan.

Under the newly published regulatory framework, the Central Bank introduced new licenses for specialized banks, stored value facilities, and payment service providers for individuals.

The Central Bank also succeeded in raising the quality of supervision and control of the insurance sector, by integrating a digital supervision platform for the insurance sector with the Central Bank's systems, with the aim of preparing reports and central analysis, while insurance companies made progress during 2022 in terms of applying internal controls to the financial reporting process, to improve the quality of financial reports in this sector.

In the area of anti-money laundering and combating the financing of terrorism, the Central Bank continued to take strict measures, with a continuous focus on deficiencies in its AML compliance frameworks, imposing financial and administrative sanctions in compliance with the Financial Action Task Force (FATF) guidelines, and issuing guidance on dealing with crypto asset risk.

One of the most important developments made by the Central Bank is the modernization of the monetary framework of the dirham under a roadmap approved by the Board of Directors to enhance the implementation of monetary policy in line with global standards. This included facilitating emergency liquidity in exchange for high-quality collateral, launching a comprehensive forecasting tool, and improving transparency in day-to-day cash operations.

In the field of consumer protection, the Central Bank began implementing regulations based on consumer protection principles and standards during 2022, as a means of determining regulatory procedures on disclosure and supervision of products, market behavior, indebtedness and privacy.

The report added that the Central Bank has updated its mortgage lending framework by implementing new standards for the level of banks' exposure to risks, which has facilitated monitoring and supervision mechanisms for the sixth most important non-oil sector in the country's economy. The Central Bank intends to move to full implementation of these standards in the medium term.

In the field of digital transformation, the report pointed out that the Board of Directors of the Central Bank adopted a comprehensive digital transformation strategy during the year 2022, which is keen to use modern technologies in the fields of supervision, control, data processing and storage, noting that this trend enhances the Central Bank's ability to provide a secure and efficient infrastructure for digital payments.

H.E. Khalid Mohammed Balama, Governor of the Central Bank of the UAE, said: "We are proud of our achievements during 2022 that support and strengthen our position among the best central banks in the world, which contributes to enhancing monetary and financial stability, and protecting consumers through effective supervision of licensed financial institutions, rational management of reserves, and the adoption of the best modern technological technologies."

His Excellency stressed that with the support and directives of our wise leadership, the Central Bank will continuously work to increase Emiratization in various leadership and management positions in the Central Bank, which reached 65% by the end of 2022, in addition to urging licensed financial institutions to increase Emiratization rates, with a focus on protecting the financial system and working to implement projects to transform financial infrastructure and sustainable finance, in line with the country's vision to make 2023 the year of sustainability.