Outlooks also show that the current account surplus in the balance of payments increased from Dhs77.5 billion in 2020 to Dhs 176.2 billion in 2021.
Inayat-ur-Rahman, Business Editor
The UAE’s real GDP growth jumped to 3.8 per cent in 2021, and is expected to reach 5.4 per cent in 2022, while the non-oil GDP growth rose to 5.3 per cent in 2021, the UAE Central Bank (CBUAE) said in its annual report on Monday.
Through the annual report, the CBUAE expressed its pride in its vital role in promoting the country efforts to contain the financial and economic challenges caused by the COVID-19 pandemic by applying a policy-based approach in the banking and insurance sectors, which are under its supervision.
The report highlights the results achieved at the UAE’s economic activity level which has begun to flourish again as a result of the country’s success in containing the health and economic impacts of the pandemic..
Outlooks also show that the current account surplus in the balance of payments increased from Dhs77.5 billion in 2020 to Dhs 176.2 billion in 2021, as a result of the increase in oil and non-oil exports, in addition to a rise in the surplus in the balance of services. The banking system in the UAE continued to enjoy a good level of capitalisation and liquidity. Equity, liquid assets and other indicators reflect the improvement of liquidity conditions in the market.
These results support CBUAE’s outlook, which indicates that the UAE economic recovery is gaining steady momentum, as a result of the early and strong response to the various challenges and their repercussions, the supportive macroeconomic policies, appropriate decisions and the leadership of the CBUAE Board of Directors, chaired by Sheikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister of the UAE, Minister of Presidential Affairs.
Sheikh Mansour mentioned that despite the numerous economic challenges caused by the COVID-19 pandemic in 2021, the UAE was able to excel on the economic front, and even improve its competitiveness, thanks to the overall vision and timely policies enacted by our leadership.
“The resilience characterising the UAE’s banking and insurance sectors played a prominent role in defining a benchmark for dealing effectively with future crises, without compromising the principles of sound risk management. This aligns with international best practice, which has reinforced confidence and credibility in the nation’s financial services sector.”
This success is in line with the goals set by the CBUAE in its latest strategic plan (2023-2026) to be among the top central banks globally, strengthening the nation’s monetary and financial stability mechanisms and supporting the competitiveness of the economy. This plan aligns with the government’s ambitious development vision for the next five decades.” Sheikh Mansour added.
“In celebration of the 50th anniversary of the founding of the UAE, the CBUAE issued a new Dhs 50 dirham banknote – the UAE’s first currency note made of a fully recyclable polymer material. A number of commemorative silver coins were also issued on this occasion, embodying the CBUAE’s role in supporting the country’s development journey that has seen innumerable accomplishments and pioneering initiatives.”
The Annual Report of the CBUAE outlines its key achievements in 2021, which are represented in several main areas, including follow-up to the implementation of the Targeted Economic Support Scheme (TESS), strengthening anti money laundering and combatting the financing of terrorism efforts, measures taken to enhance the flexibility of the financial system in the UAE, as well as measures to ensure the supervisory and monitoring performance of the banking and insurance sectors. In addition to the new tools for managing the UAE monetary market, green and sustainable finance programmes, digital transformation projects, strengthening of the payment systems and the financial technology sector, and readiness to face cyber threats, operational risks and other risks.
The Report highlights measures taken by the CBUAE to help affected companies and individuals in the UAE by the decrease in demand and the increase in costs, as a part of the TESS, which was rebalanced in 2021. These recovery measures will replace other designed measures to ease pressures on retail, corporate and banks.
As a financial regulator, the CBUAE also introduced a range of internal measures and processes to promote national monetary and financial stability, ensure access to liquidity, and deliver a prudent risk-based supervision framework in the financial sector. It also conducted stress testing to examine the ability of the UAE’s banks to overcome future economic changes.
In the field of anti-money Laundering and combatting the financing of terrorism, the report focuses on the efforts made by the CBUAE at various levels, most notably its contribution to national initiatives, improved supervisory tools to monitor the degree and level of risks, issuance of regulations and guidelines in various sectors, training programmes and national and international cooperation, including the International Financial Action Task Force (FATF).
The CBUAE has achieved several milestones during 2021, including the issue of the third edition of the national currency, by launching the new Dhs 50 polymer banknote, which comes in honour of the founding fathers and to commemorate the nation’s 50th anniversary.